At 12% interest only, the monthly payment is 10% of the loan amt. So, $100,000 at 12% is $1,000 per month; $175,000 at 12% is $1750/month. From there, I guestimate, and add about 10% for principal.
For example, a $200,000 note at 12% is $2,000 per month, so at 8%, I just divide $200,000 into thirds, and multipy by 2, which is about $1300. That’s interest. Then, I add 10% or so for principal, which makes $1430.
How far off am I?
And, of course, I enter it into a simple loan calculator that can be found on 1,000 websites to be sure. But, I use the “guestimate” formula to figure out whether I even need to bother.
My point is, if you need a financial calculator to determine whether a deal is good, it probably isn’t a good deal! If you can do rough math in your head and see a sizeable profit, it is worth going forward.
Dear Mr. Bronchick,
I respect your advice your professionalism. Responding in kind on a “personal” level doesn’t help this great site, or your rep here. If you read your statement again, you may realize that typos and grammatical mistakes happen to the beast of us.
Take care!
Lance
Re: How do you figure mortgage payments? - Posted by JoeKaiser
Posted by JoeKaiser on February 20, 2002 at 14:46:30:
Errrr, Bill, the seller is sitting across the table from me. He’s agreed to carry back $45k at 7.25 %, and he wants to set it up with monthly payments that will carry him through to retirement in 11 years. He’s ready to sign . . . and I need a monthly payment number to put in that blank spot there on the form before he’ll agree to do so.
Dooooooh.
Me, I bring the calculator just in case and let junior play with it if things aren’t going so well.