Amount of Payment |
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Amount of Payment |
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Discussion:
The amount of the periodic payment on a loan equals the compound interest factor (from the "amount to amortize $1 column) times the amount of the loan.
Mortgage Problem #1:
What is the monthly payment on a $100,000 loan for 15 years at 8% interest.
Solution:
| 1. | Using the 8% monthly table, locate the appropriate factor (the mortgage constant). This is usually column 6 and is labeled "Amount to Amortize $1", "Partial Payment", or "Mortgage Constant". |
| 2. | Multiply the factor by the loan amount. |
| 3. | Payment = Mortgage Constant x Loan Amount. |
Factor = 0.00955652
Payment = 0.00955652 x $100,000 = $955.65
Next Mortgage Problem (Loan Balance)
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