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I need help calculating a mortgage payment.  What would your payment be for a 15-year,...

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calvin85sg | Student, Undergraduate | eNotes Newbie

Posted September 29, 2009 at 6:54 PM via web

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I need help calculating a mortgage payment. 

What would your payment be for a 15-year, $150,000 mortgage at 9% compounded annually assuming payments are made twice a month?

 

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mr-angel | College Teacher | (Level 2) Adjunct Educator

Posted October 4, 2009 at 10:18 AM (Answer #1)

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This problem is an annuity problem.  An Annutity is a finite series of equal payments that occur at regular intervals. You can use the following formula to compute payments

 

C =       PV*R

      1- 1/ (1+r)^t

Where R = is rate T is time or intervals, PV is present value, and C is payment amounts.  You can use financial calculator and just put in values (you can buy a financial calulator for $30 or use online equivalent software), or a standard calculator and this formula to get your payment.

24 payments are made per year giving you a 15 year interval of 15*24 = 360

A 9% yearly interest rate divided by 24 months gives you a bi-monthly rate of R= 0.375

C      =   150,000 * 0.00375

            1-        1    

                  (1+0.00375)^360

C value works out to be 760.03 bi-monthly

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mr-angel | College Teacher | (Level 2) Adjunct Educator

Posted October 4, 2009 at 10:20 AM (Answer #2)

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This problem is an annuity problem.  An Annutity is a finite series of equal payments that occur at regular intervals. You can use the following formula to compute payments

 My underlining format did not work out well, but here it is.

C =       PV*R            divided by

      1- 1/ (1+r)^t

Where R = is rate T is time or intervals, PV is present value, and C is payment amounts.  You can use financial calculator and just put in values (you can buy a financial calulator for $30 or use online equivalent software), or a standard calculator and this formula to get your payment.

24 payments are made per year giving you a 15 year interval of 15*24 = 360

A 9% yearly interest rate divided by 24 months gives you a bi-monthly rate of R= 0.375

C      =   150,000 * 0.00375 divided by

            1-        1     divided by

                  (1+0.00375)^360

C value works out to be 760.03 bi-monthly

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