Finance question: Need help with figuring Truth in Lending statement - Posted by Russ Sims

Real Estate Investing
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Posted by DougO(NM) on May 31, 2000 at 11:59:26:

TValue will do this for you very easily. You can also do it by hand. Break it down into each part:

  1. Figure out the balance at the end of 18 months at the initial interest rate. Figure out the interest paid during this period
  2. Using this balance, re-amortize it using the new interest rate over the remaining term. Figure out the interest paid during this period. Add the two interest figures together.

Doug

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Finance question: Need help with figuring Truth in Lending statement - Posted by Russ Sims

Posted by Russ Sims on May 31, 2000 at 11:46:14:

I’m sure this is basic Finance 101 stuff, but I’m selling on a land contract, and need to fill out the Truth in Lending statement. My problem is that the note my buyer will give to me has an adjustable rate (because my underlying loan has likewise). So the interest is set at 9.0% for 18 months, and then jumps to 9.5% until I’m cashed out with a balloon payment. Truth in lending requires that I computate interest paid for the life of the loan. No problem for the first 18 months. Just plug in 9% for 18 months on a 30 year term to get the interest total. But now what? The interest rate changes to 9.5% for the remaining 28.5 years. Do I simply figure interest on the initial financed amount for 28.5 years? Or do I figure the interest based on the paid down balance as of the date the rate changes? Sorry for these basic questions! Thanks in advance
Russ Sims