On this page would be the the calculators for the prospective buyer.

All you do is type in the number of months your loan will cover, what the interest rate will be and the amount of your loan.  Click on "Compute" and see how much the cost will be per month.

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For the ambitious:

How to calculate amortization tables by hand

NOTE: This first part is for United States mortgages.

First you must define some variables to make it easier to set up: P = principal, the initial amount of the loan I = the annual interest rate (from 1 to 100 percent) L = length, the length (in years) of the loan, or at least the length over which the loan is amortized.

The following assumes a typical conventional loan where the interest is compounded monthly. First I will define two more variables to make the calculations easier: J = monthly interest in decimal form = I / (12 x 100) N = number of months over which loan is amortized = L x 12

Okay now for the big monthly payment (M) formula, it is:

                              J

         M  =  P  x ------------------------

                 

                      1  - ( 1 + J ) ^ -N



   where 1 is the number one (it does not appear too clearly on some browsers)

So to calculate it, you would first calculate 1 + J then take that to the -N (minus N) power, subtract that from the number 1. Now take the inverse of that (if you have a 1/X button on your calculator push that). Then multiply the result times J and then times P. Sorry, for the long way of explaining it, but I just wanted to be clear for everybody.

The one-liner for a program would be (adjust for your favorite language):

         M = P * ( J / (1 - (1 + J) ** -N))

So now you should be able to calculate the monthly payment, M. To calculate the amortization table you need to do some iteration (i.e. a simple loop). I will tell you the simple steps :

Step 1: Calculate H = P x J, this is your current monthly interest
Step 2: Calculate C = M - H, this is your monthly payment minus your monthly interest, so it is the amount of principal you pay for that month
Step 3: Calculate Q = P - C, this is the new balance of your principal of your loan.
Step 4: Set P equal to Q and go back to Step 1: You thusly loop around until the value Q (and hence P)
goes to zero.

Finding the Number of Periods given a Payment, Interest and Loan Amount

Many people have asked me how to find N (number of payments) given the payment, interest and loan amount. I didn't know the answer and in my calculators I find it by doing a binary search over the payment formula above. However, Gary R. Walo found the answer to the actual formula in the book: The Vest Pocket Real Estate Advisor by Martin Miles (Prentice Hall). Here is the formula:

n = -1/q * (LN(1-(B/m)*(r/q)))/LN(1+(r/q))

Where:

• q = amount of annual payment periods
• r = interest rate
• B = principal
• m = payment amount
• n = amount payment periods
• LN = natural logarithm

For Finding Remaining Principal Balance

P = P * (1 - ((1 + J) ** t - 1) / ((1 + J) ** N - 1))

where:

• P = principal, the initial amount of the loan
• I = the annual interest rate (from 1 to 100 percent)
• L = length, the length (in years) of the loan, or at least the length over which the loan is amortized.
• J = monthly interest in decimal form = I / (12 x 100)
• N = number of months over which loan is amortized = L x 12
• t=number of paid monthly loan payments

This is from Mortgage Backed Securities by William W Barlett.

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