Colli Real Estate

Mortgage interest and principle?

If we have a 145,000 principle balance with 6.0% fixed interest and 20 years to pay it off, can you tell me the monthly payment please. Is this formula correct: 145K divided by 20 multiplied by .06 and then divided by 12 to calculate monthly interest payment? Each month the payment (principle payment plus interest) would decrease by a small amt due to principle being paid down, correct? Thank you in advance for answers.

Yes and no.

The wonders of compound interest is staggering.

I bought a house in 1991 for 77K…on a 25 year note.
If I don’t pay it off ahead of time, the actual cost of the house with interest (not counting tax and insurance) will be $210.000.

That the reason why it helps to put a small amount on the principle in the beginning…it lessens the interest you pay the most on. If you have not put down a significant down payment (say half the asking price) you will pay triple the asking price by the time you finish the mortgage.

BTW…do not forget the other costs when you are crunching numbers…taxes, and interest will add to the debt, and while the mortgage amount goes down slightly, they only go one way…up.

Deriving the Annual Compound Interest Formula

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The New Reverse Mortgage Formula $33.13 This book is in Used condition

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