| Q:
We
are presently shopping for a house in Burbank. We have
been quoted different mortgage rates by a couple of
lenders, depending on the amount of points that we pay
up front. In addition, there are different rates for
15 year loans and 30 year loans. Our real estate
broker always gives us the proposed monthly payment
when asked. Is there a simple formula to figure out a
mortgage payment using a regular calculator?
A: The monthly payment
on a simple interest, fully amortized mortgage or car
payment cannot be figured out using a $5 calculator,
however this can be done with a FINANCIAL calculator.
These calculators are relatively inexpensive and can
easily be purchased locally. However, you are in luck
today, because every year or so I offer a free copy of
the V.I.P. Handy Dandy
Factor Table. This table easily and quickly
figures out your monthly payment on almost any
conceivable fully amortized loan. Using this table and
an inexpensive calculator, you can figure out your
payment with one multiplication. Frankly, this is much
quicker than using a financial calculator.
|
As I write this answer, the
approximate rate for a 30 year mortgage is 7.25% and
the approximate rate for a 15 year mortgage is 7%.
Here’s how a factor table works. A factor is merely
a cost per thousand dollars for the specific interest
and term you want, using a complicated formula, not
the simple one you requested. The factor for a 7.25%
30 year loan is .0068218. The factor for a 7% 15 year
loan is .0089883.
If you are buying a house for
$200,000 with $40,000 down, the loan amount is
$160,000. Merely multiply $160,000 times .0068218 to
figure the payment on a 7.25% 30 year loan. $160,000 X
.0068218 = a monthly payment of $1,091.49. If you wish
to figure out the monthly payment on a 15 year loan at
7%, you merely multiply $160,000 X .0089883 =
$1,438.13. Figuring the payment is a cinch once you
know the factor. The V.I.P. Factor Table covers
amortized loans from 4% interest to 26% interest and
from 1 to 40 years in duration. I will be happy to
send you a copy of this schedule at no cost. Merely
send me a stamped, self-addressed envelope with the
comment "factor table." My office will be
happy to send this to you within a few days with my
compliments.
Peter Rosenthal
VIP Trust Deed Company |
