How Do You Calculate A Fixed Rate Mortgage?
Fixed-rate mortgages (FRM) make up approximately 75 percent of the home-financing market. As the names suggests, the interest rate for an FRM remains constant throughout the term of the loan. This does not necessarily mean that the payments are constant. “Interest only” FRM’s, for example, have a fixed interest rate, but the payments change after the interest-only period expires. While the term of a fixed-rate mortgage typically varies from 10 to 40 years, 15- and 30-year loans are the most common. Collect the information you will need for the calculations–the amount of the loan; the term of the loan, which is usually in years; and the annual percentage rate (APR). You will also need the payment structure. Most of the time it will be monthly, but bimonthly and biweekly payment structures may be available. Determine the number of payments per year. Monthly plans have 12 payments per year and bimonthly plans have 24. Biweekly plans have 26, since there are 52 weeks in a year and payment
