What is the monthly payment

All mortgages in the United States have a monthly mortgage payment of principal and interest. In most cases, this is the payment the borrower is obliged to make every month. In a few cases, the monthly payment is divided in half, and the borrower pays half every two weeks (a "biweekly"), or twice a month (a "bimonthly"). But even in these cases, a monthly payment is calculated as the first step.

The monthly payment has two components: interest and principal. In each month, the interest is calculated by dividing the rate by 12, and multiplying it times the loan balance in the preceding month. For example, if the rate is 6% and the loan balance is $100,000, the interest payment for that month is .06/12 times $100,000, or $500. The principal is the payment less the interest. If the payment is $600 in the example, the principal is $100.

Since each payment of principal reduces the loan balance by the same amount, interest payments decline over time, and principal payments rise. The pace of repayment quickens as the mortgage ages.

The monthly payments shown here are "fully amortizing." This means that if they are continued through the life of the loan, the balance will be extinguished with the final payment.

Not all payments are fully amortizing, especially on

adjustable rate mortgages (ARMs). Some payments are interest only for a period. The principal payment is zero, so the loan balance does not change. In other ARMs, the payment is actually less than the interest for a period, so the principal payment is negative. It adds to the loan balance, rather than reducing it, referred to as "negative amortization." The tables do not cover these exotic cases.

Finding the Monthly Payment: Example 1

The Goldblatts are borrowing $180,000 for 15 years at 5.5%. To find their monthly payment, go to the page that covers a 5.5% interest rate, run down the left-hand column to $180,000, then on the same line go to the second column headed 15 years. The payment is $1470.76.

Adding and Subtracting Payments: Example 2

The Ferguson's are also borrowing for 15 years at 5.5%, but their loan is $182,000, which is not shown on the table. In this case, add the $1470.76 payment on $180,000 to the $16.35 payment on $2,000, resulting in a payment of $1487.11 on $182,000.

You will get the same result if you subtract the payment of $65.37 on $8,000 from the payment of $1552.46 on $190,000. Don't worry about a difference of a penny or two, it arises because of rounding.

Multiplying Payments: Example 3

The Smiths are borrowing for 15 years at 5.5%, but their $600,000 loan goes beyond the limits of the table. In this case, multiply the $2451.26 payment on $300,000 by 2, which results in a payment of $4902.52. You will also get this result if you multiply the $1634.17 payment on $200,000 by 3. Rate Interpolation: The Johnsons are borrowing $100,000 for 15 years at 5.125%, a rate that is not

Appendix A: Monthly Payment Tables shown in the tables. In this situation, the payment will be approximately equal to the average of the payment of $790.80 at 5%, and the payment of $803.88 at 5.25%. Adding them and dividing by 2 you get $797.34. Any error will be no more than a few pennies. Total Interest: The monthly payment tables can be used to calculate the total amount of interest you will pay over the life of the loan, assuming the loan has a fixed interest rate and you hold it to term. Since the total of all principal payments equals the loan amount, deducting the loan amount from the total payments will leave the total interest payments.

For example, the Goldblatts will pay $ 1470.76 for 15 years. Multiplying $1470.76 times 180 gives total payments of $264,736.80. Subtracting the loan amount of $180,000 results in interest payments of $84,736.80.

Loan

Number of Years in Term

Amount

10

15

20

25

30

$1,000

$10.13

$7.40

$6.06

$5.28

$4.78

$2,000

$20.25

$14.80

$12.12

$10.56

$9.55

$3,000

$30.38

$22.20

$18.18

$15.84

$14.33

$4,000

$40.50

$29.59

$24.24

$21.12

$19.10

$5,000

$50.63

$36.99

$30.30

$26.40

$23.88

$6,000

$60.75

$44.39

$36.36

$31.68

$28.65

$7,000

$70.88

$51.78

$42.42

$36.95

$33.42

$8,000

$81.00

$59.18

$48.48

$42.23

$38.20

$9,000

$91.13

$66.58

$54.54

$47.51

$42.97

$10,000

$101.25

$73.97

$60.60

$52.79

$47.75

$15,000

$151.87

$110.96

$90.90

$79.18

$71.62

$20,000

$202.50

$147.94

$121.20

$105.57

$95.49

$25,000

$253.12

$184.93

$151.50

$131.96

$119.36

$30,000

$303.74

$221.91

$181.80

$158.36

$143.23

$35,000

$354.36

$258.90

$212.10

$184.75

$167.10

$40,000

$404.99

$295.88

$242.40

$211.14

$190.97

$45,000

$455.61

$332.86

$272.70

$237.53

$214.84

$50,000

$506.23

$369.85

$303.00

$263.92

$238.71

$55,000

$556.85

$406.83

$333.29

$290.32

$262.58

$60,000

$607.48

$443.82

$363.59

$316.71

$286.45

$65,000

$658.10

$480.80

$393.89

$343.10

$310.32

$70,000

$708.72

$517.79

$424.19

$369.49

$334.20

$75,000

$759.34

$554.77

$454.49

$395.88

$358.07

$80,000

$809.97

$591.76

$484.79

$422.27

$381.94

$85,000

$860.59

$628.74

$515.09

$448.67

$405.81

$90,000

$911.21

$665.72

$545.39

$475.06

$429.68

$95,000

$961.83

$702.71

$575.69

$501.45

$453.55

$100,000

$1,012.46

$739.69

$605.99

$527.84

$477.42

$110,000

$1,113.70

$813.66

$666.58

$580.63

$525.16

$120,000

$1,214.95

$887.63

$727.18

$633.41

$572.90

$125,000

$1,265.57

$924.61

$757.48

$659.80

$596.77

$130,000

$1,316.19

$961.60

$787.78

$686.19

$620.64

$140,000

$1,417.44

$1,035.57

$848.38

$738.98

$668.39

$150,000

$1,518.68

$1,109.54

$908.98

$791.76

$716.13

$160,000

$1,619.93

$1,183.51

$969.57

$844.54

$763.87

$170,000

$1,721.17

$1,257.47

$1,030.17

$897.33

$811.61

$175,000

$1,771.79

$1,294.46

$1,060.47

$923.72

$835.48

$180,000

$1,822.42

$1,331.44

$1,090.77

$950.11

$859.35

$190,000

$1,923.66

$1,405.41

$1,151.37

$1,002.89

$907.09

$200,000

$2,024.91

$1,479.38

$1,211.97

$1,055.68

$954.84

$210,000

$2,126.15

$1,553.35

$1,272.56

$1,108.46

$1,002.58

$220,000

$2,227.40

$1,627.32

$1,333.16

$1,161.25

$1,050.32

$225,000

$2,278.02

$1,664.30

$1,363.46

$1,187.64

$1,074.19

$230,000

$2,328.64

$1,701.29

$1,393.76

$1,214.03

$1,098.06

$240,000

$2,429.89

$1,775.26

$1,454.36

$1,266.81

$1,145.80

$250,000

$2,531.13

$1,849.22

$1,514.96

$1,319.60

$1,193.54

$260,000

$2,632.38

$1,923.19

$1,575.55

$1,372.38

$1,241.28

$270,000

$2,733.62

$1,997.16

$1,636.15

$1,425.16

$1,289.03

$275,000

$2,784.25

$2,034.15

$1,666.45

$1,451.56

$1,312.90

$280,000

$2,834.87

$2,071.13

$1,696.75

$1,477.95

$1,336.77

$290,000

$2,936.11

$2,145.10

$1,757.35

$1,530.73

$1,384.51

$300,000

$3,037.36

$2,219.07

$1,817.95

$1,583.52

$1,432.25

Loan Amount

Number of Years in Term

10

15

20

25

30

$310,000

$3,138

60

$2,293.04

$1,878.54

$1,636.30

$1,479.99

$320,000

$3,239

.85

$2,367.01

$1,939.14

$1,689.08

$1,527.73

$325,000

$3,290

.47

$2,403.99

$1,969.44

$1,715.47

$1,551.60

$330,000

$3,341

.09

$2,440.98

$1,999.74

$1,741.87

$1,575.48

$340,000

$3,442

.34

$2,514.94

$2,060.34

$1,794.65

$1,623.22

$350,000

$3,543

.58

$2,588.91

$2,120.94

$1,847.43

$1,670.96

$360,000

$3,644

.83

$2,662.88

$2,181.53

$1,900.22

$1,718.70

$370,000

$3,746

.08

$2,736.85

$2,242.13

$1,953.00

$1,766.44

$375,000

$3,796

.70

$2,773.83

$2,272.43

$1,979.39

$1,790.31

$380,000

$3,847

.32

$2,810.82

$2,302.73

$2,005.78

$1,814.18

$390,000

$3,948

.57

$2,884.79

$2,363.33

$2,058.57

$1,861.92

$400,000

$4,049

.81

$2,958.76

$2,423.93

$2,111.35

$1,909.67

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