How Do You Calculate A Payment With An Interest Only Balloon Loan?
Most people have to take out a loan to purchase their home. One loan option is an interest-only balloon loan. With this type of loan, your monthly payment is smaller because it only covers the interest that accrues on the loan. In addition, at the end of the term of the balloon loan, the entire amount of the loan is due. To calculate the monthly payment on an interest-only balloon you need to know the amount borrowed and the interest rate. Determine the amount you need to borrow for your interest-only balloon loan. Find the interest rate that you will pay. You should get quotes from several lenders to find the lowest rate. Divide the annual interest rate by 1200 to convert the annual interest rate to the monthly interest rate expressed as decimal. For example, an annual interest rate of 7.2 percent will result in a monthly interest rate expressed as a decimal of 0.006. Multiply the monthly interest rate expressed as a decimal from step 3 times the amount borrowed from step 1 to calcula
