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Any math experts here?

forkliftkingforkliftking Member Posts: 5,173
edited December 2011 in General Discussion
I need a formula to figure an amortization sechedule.
Say I borrow (x) amount of dollars at 3.25% APR and have to repay the loan 2% of the balance monthly. example: If I borrow $200,000 the first months payment will be $4000 with $541.66 going to interest and $3458.34 goint to principle. The remaining balance will be $196,541.66 for the second month. Is there a fomula to show what each remaining payment will be without having to figure the balance every month? I searched for amortization schedule calculators on the web but couldn't come up with anything that would figure this and show a chart.

Comments

  • JnRockwallJnRockwall Member Posts: 16,350 ✭✭✭
    edited November -1
  • NOAHNOAH Member Posts: 9,690
    edited November -1
    i think you have the payment and intrest backward ,I think!! I could be wrong.[:0]
  • savage170savage170 Member Posts: 36,480 ✭✭✭
    edited November -1
    quicken loans has a good calculater on their site
  • bayl778bayl778 Member Posts: 383
    edited November -1
    You have it right. Probably a function on Excell will do it or any hand held financial calculator.
  • forkliftkingforkliftking Member Posts: 5,173
    edited November -1
    quote:Originally posted by Laeger
    http://www.bankrate.com/calculators/mortgages/loan-calculator.aspx

    That calculator only shows amortization in monthly payments not in percentage payments.
  • forkliftkingforkliftking Member Posts: 5,173
    edited November -1
    quote:Originally posted by NOAH
    i think you have the payment and intrest backward ,I think!! I could be wrong.[:0]

    You are wrong.
  • forkliftkingforkliftking Member Posts: 5,173
    edited November -1
    quote:Originally posted by buschmaster
    algebraically it's a mess. it gets into ^n and n! stuff. just use a calculator set up for that.



    Where would I find a calculator for that?
  • SpartacusSpartacus Member Posts: 14,415
    edited November -1
    quote:i think you have the payment and intrest backward ,I think!! I could be wrong.

    You are wrong.


    don't know what kind of loan YOURE getting, but the rest of us pay the majority of interest in the early years of a loan. in the past, only 10% of the first years payment went to principal.
    if you really have a 3.25% mortgage loan with 90% of initial payments going to principal, please post a link to the bank. i would re-finance in a heart beat!

    tom
  • aw3olaw3ol Member Posts: 583 ✭✭✭✭
    edited November -1
    Is you work the problem backwards using the formula y = mx + b

    [:o)]
  • calrugerfancalrugerfan Member Posts: 18,209
    edited November -1
    If you only pay 2% of the balance monthly, you will never pay it off. Your payment will continue to get smaller and smaller.

    It's like cutting the distance between two points in half over and over. They will never meet.
  • forkliftkingforkliftking Member Posts: 5,173
    edited November -1
    quote:Originally posted by Spartacus
    quote:i think you have the payment and intrest backward ,I think!! I could be wrong.

    You are wrong.


    don't know what kind of loan YOURE getting, but the rest of us pay the majority of interest in the early years of a loan. in the past, only 10% of the first years payment went to principal.
    if you really have a 3.25% mortgage loan with 90% of initial payments going to principal, please post a link to the bank. i would re-finance in a heart beat!

    tom

    I never mentioned this is a mortgage loan. This is just one option my banker offered me on a secured loan.
  • forkliftkingforkliftking Member Posts: 5,173
    edited November -1
    quote:Originally posted by calrugerfan
    If you only pay 2% of the balance monthly, you will never pay it off. Your payment will continue to get smaller and smaller.

    It's like cutting the distance between two points in half over and over. They will never meet.

    I understand what you are saying but there comes a point where you simply pay off the remaining principle. Like for instance when it gets down to $10k or so. I guess no one really knows how to figure out an amortization chart on this problem. I'll just call my banker in the morning and ask him.
  • austin20austin20 Member Posts: 27,860 ✭✭✭
    edited November -1
    I am no math expert but I did stay at a Holiday Inn.[:D]
  • MBKMBK Member Posts: 3,503 ✭✭
    edited November -1
    Heck.
    For a small fee I can make a schedule to do any amortization problem.

    I started a software company in 1980 to supply mortgage security analyticals for Wall Street trading desks, competed with Bloomberg. Brain is almost 70 now but still works most of the time.
  • JustCJustC Member, Moderator Posts: 16,036 ******
    edited November -1
    get an HP 12C financial calculator, the booklet will show you in short order. Keep in mind, when I was doing them in college, working on my Finance Degree, they can and will take up 2-3 sheets of paper, for 1 loan. There are two answers for every monthly calculation, interest and principle. for a 30yr loan, that is 720 calculations[:0]
  • RedoubtableRedoubtable Member Posts: 69
    edited November -1
    quote:Originally posted by forkliftking
    I need a formula to figure an amortization sechedule.
    Say I borrow (x) amount of dollars at 3.25% APR and have to repay the loan 2% of the balance monthly. example: If I borrow $200,000 the first months payment will be $4000 with $541.66 going to interest and $3458.34 goint to principle. The remaining balance will be $196,541.66 for the second month. Is there a fomula to show what each remaining payment will be without having to figure the balance every month? I searched for amortization schedule calculators on the web but couldn't come up with anything that would figure this and show a chart.

    Do you want to figure out what portion of any arbitrary payment is interest and what portion is going towards reducing the principal?

    Probably the easiest way to do this is to do this in a spreadsheet program like MS Excel or Open Office's Calc (which is free to download).
  • roswellnativeroswellnative Member Posts: 9,389 ✭✭✭
    edited November -1
    goto Quicken

    Input the original bal
    Interest rate
    and term.
    Although always described as a cowboy, Roswellnative generally acts as a righter of wrongs or bodyguard of some sort, where he excels thanks to his resourcefulness and incredible gun prowesses.
  • forkliftkingforkliftking Member Posts: 5,173
    edited November -1
    quote:Originally posted by Redoubtable
    quote:Originally posted by forkliftking
    I need a formula to figure an amortization sechedule.
    Say I borrow (x) amount of dollars at 3.25% APR and have to repay the loan 2% of the balance monthly. example: If I borrow $200,000 the first months payment will be $4000 with $541.66 going to interest and $3458.34 goint to principle. The remaining balance will be $196,541.66 for the second month. Is there a fomula to show what each remaining payment will be without having to figure the balance every month? I searched for amortization schedule calculators on the web but couldn't come up with anything that would figure this and show a chart.

    Do you want to figure out what portion of any arbitrary payment is interest and what portion is going towards reducing the principal?

    Probably the easiest way to do this is to do this in a spreadsheet program like MS Excel or Open Office's Calc (which is free to download).

    I have found 100's of websites with free amortization schedules but they all show terms in months and years. I would like one to show terms on paying a % monthly.
  • RedoubtableRedoubtable Member Posts: 69
    edited November -1
    quote:Originally posted by forkliftking
    I have found 100's of websites with free amortization schedules but they all show terms in months and years. I would like one to show terms on paying a % monthly.

    It's probably going to be easiest to figure out what you want by using a spreadsheet program.

    If your monthly payment is a percentage of the moving balance, you might end up paying for a very long time.

    Edit: If you start with 'X' dollars as a loan and pay 'I' interest every pay period along with paying 'A' percent of the moving balance. The balance after every pay period is:

    balance = x * (1+I)^n * (1-A)^n

    where 'n' is the number of pay periods. So in your initial example where the APR = 3.25%, $200,000 borrowed, and 2% paid every month, after twenty months the balance would be:

    balance = $200,000 * (1 + 0.0325/12)^20 * (1 - 0.02)^20 = $140,943.16

    Anyway, I think that is right. If anyone thinks I'm wrong feel free to correct me.
  • forkliftkingforkliftking Member Posts: 5,173
    edited November -1
    I gave up searching for a website that would do this for me so I got out my adding machine and an ink pen. There are 4 columns listed. column 1 is monthly payment based on 2% of the original loan (I based it on $60,000.00). Column 2 is principle paid. Column 3 is interest paid, and column 4 is balance of loan due. It took me 20 minutes to do just the first 12 payments. As one poster stated above about cutting a rope in half many times, I'd like to find the month where it would be more benificial to just pay off the remaining balance with a lump sum. At the end of 12 months, it looks like the balance is still going down drastically.
    amrotization.jpg
  • MaaloxMaalox Member Posts: 5,171 ✭✭✭
    edited November -1
    Why are you considering a loan like this instead of a typical loan for a given term at a given interest rate? Just seems overly complicated to me and I don't see the benefit.

    If you want to pay $4,000 per month on a 200,000 loan at 3.25% interest it will take you 54 payments to pay it off.
    Regards, MAALOX
  • forkliftkingforkliftking Member Posts: 5,173
    edited November -1
    quote:Originally posted by Maalox
    Why are you considering a loan like this instead of a typical loan for a given term at a given interest rate? Just seems overly complicated to me and I don't see the benefit.

    If you want to pay $4,000 per month on a 200,000 loan at 3.25% interest it will take you 54 payments to pay it off.

    I found some real estate to buy. I don't want to go through all of the closing cost and procedures to finance it. So I'm just borrowing the money with a secured loan with existing assets. Two options my banker gave me was a simple 2% monthly loan payback with 3.25% interest or simply make interest payments and choose my own principle payments as I see fit each month. The 2% option was new to me as I usually just take the interest only approach, pay on the principle as I can, and pay it off when I sell.
  • MBKMBK Member Posts: 3,503 ✭✭
    edited November -1
    As a former finance proffesor I am duty bound to remind several of you that loans involve Principal, life involves principles.[;)]
  • lksmith03lksmith03 Member Posts: 1,742 ✭✭✭✭✭
    edited November -1
    quote:Originally posted by JustC
    get an HP 12C financial calculator, the booklet will show you in short order. Keep in mind, when I was doing them in college, working on my Finance Degree, they can and will take up 2-3 sheets of paper, for 1 loan. There are two answers for every monthly calculation, interest and principle. for a 30yr loan, that is 720 calculations[:0]

    I feel your pain, I was a Cheapskate/Hardhead that didn't want to spend the $20 for a BA2Plus to do TVM and amortization I did it all by hand (well I did have a $2 simple math Calculator)
  • lksmith03lksmith03 Member Posts: 1,742 ✭✭✭✭✭
    edited November -1
    quote:Originally posted by forkliftking
    I need a formula to figure an amortization sechedule.
    Say I borrow (x) amount of dollars at 3.25% APR and have to repay the loan 2% of the balance monthly. example: If I borrow $200,000 the first months payment will be $4000 with $541.66 going to interest and $3458.34 goint to principle. The remaining balance will be $196,541.66 for the second month. Is there a fomula to show what each remaining payment will be without having to figure the balance every month? I searched for amortization schedule calculators on the web but couldn't come up with anything that would figure this and show a chart.


    Here's a good place to start if you have Excel. There are several templates you can browse thru to find one you like
    http://office.microsoft.com/en-us/templates/loan-amortization-schedule-TC001019777.aspx
  • BoltactionManBoltactionMan Member Posts: 2,048 ✭✭✭
    edited November -1
    Forkliftking,
    Your starting off wrong, but on the right track. Your principal payment will be constant, 2% per month = 50 equal monthly principal payments. Your interest charge, and therefore your total payments will decrease every month.

    For example on $100,000 loan. 2% is $2000 per month principal payment, multiply remaining balance by rate, divide by months etc. like normal

    I agree that the HP will probably be able to figure it, I guarantee you that the banks main computer can figure it, you can do it monthly as well. It's called a principal plus option.

    KC
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