How Do You Calculate Different Mortgage Payments?
When shopping for a mortgage, different banks will charge different rates to the borrower. The different interest rates will change the amount of monthly payments. Banks may also differ on the time period that the borrower has to pay back the loan. Most people should choose the bank with the lowest interest rate. To calculate different payments the borrower only needs to plug in the different variables, interest rate and time, into the mortgage payment formula to find the new monthly payments. Find the different interest rates and time periods for loan repayments. In addition, you need to know the amount you will borrow. For example, a person wants to borrow $165,000. One bank will charge 8 percent interest annually and have a repayment of 20 years. Divide the interest rate per month by 12 months. Then multiply the number of years of repayment by 12 months. In the example, 8 percent divided by 12 months equals 0.006666667. Then, 20 years times 12 months equals 240. Multiply the amount
