 # Calculating the yield on a balloon note - Posted by Kevin R. Hoskins

Posted by J.P. Vaughan on February 11, 2002 at 13:49:12:

You need a financial calculator or computer program like TValue for this calculation. I doubt anyone knows the formulas anymore.

Calculating the yield on a balloon note - Posted by Kevin R. Hoskins

Posted by Kevin R. Hoskins on February 11, 2002 at 24:07:04:

Will someone please give me the formula for calculating the yield on a note amortized for 30 years with a 5 year balloon?

Many thanks,

Kevin R. Hoskins
KEVLIS CORPORATION
PO Box 5893
Bellingham, WA 98227-5893

Re: Calculating the yield on a balloon note - Posted by Brent_IL

Posted by Brent_IL on February 18, 2002 at 24:03:25:

If it is a fully amortizing loan, it’s the same rate as the mortgage. Most financial calculators assume that the balloon payment is paid with the last scheduled payment. The final payment you make is the total of the monthly payment and the balloon.

If the loan is not a fully amortizing loan, but has negotiated payments, the rate will be different.

Re: Calculating the yield on a balloon note - Posted by Dave T

Posted by Dave T on February 17, 2002 at 12:24:47:

The total yield on a balloon note is equal to or slightly less than the stated interest on the note.

If the note is interest only, then the yield is equal to the stated rate. For an amortizing note, the yield is slightly less than the stated interest rate.

I know you asked for a formula, but I hope this helps.

Re: Calculating the yield on a balloon note - Posted by Kevin

Posted by Kevin on February 12, 2002 at 08:49:05: