How do I calculate the mortgage repayment rate as my bank does?
Written By: admin on July 21, 2009
One Comment
I want to calculate the impact of making lump sum extra payments (more then one in the life of the loan) and of making extra regular payments. I want to best plot how to attack paying off the loan as quickly as possible.
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MS works, loaded on most peoples computer has a very simple loan amortization template.
You can run it out 360 payments if you have a 30 yr loan, then replace the fixed payments with the lump sums you reckon you will be making. then look toward the bottom, and you will see that the $0 balance moves up to an earlier payment. This is an approximation of your precise balance owing to the way banks credit interest and the lack of detail/flexibility in the program.
For example making that lump sum payment on a different day affects everything slightly and the program doesn’t account for that..BUT it will get you to within the month..close enough for what you are looking to do.
Alternatively, if you go to your local small town bank, and question nicely, anyone in the loan department can run this out in 2 seconds.
The BEST plot is the one you have, nibble at it every time you get extra money. There is no best payment schedule, the sooner you get it to the bank, the shorter the life of your loan…SIMPLE
Excellent Luck