Separate principal and interest portion of a mtg pmt????

mtgobsessed

New member
Joined
May 15, 2009
Messages
5
Hi,

I usually use a mortgage spreadhseet to calculate the amortization schedule but I want to be able to do this using math on my own to fully comprehend the concepts behind it. I am using an example of a mtg of 200,000 5% compunded semi annually, 30 year amortization with bi weekly payments. For quickness sake I got the payment off the financial calculator although thanks to this lovely forum I can get it with a pen and paper too now. the biweekly pmt would be: 492.0917353... SO an excel spreadsheet tells me 380.25 is interest and 111.84 is principal. (onthe first payment for now)

How do they get this!? and if possible is there a special function on the TI BA II Plus that allows me to do that?

BUT mainly just wish to see how i could separate that 492.09 into p and i using old fashion math!

Much appreciated
 
1) There is no such thing as "Old Fashioned" math. Math is math. Slide Rules are "old fashioned", but why would you want to use one today, except as a parlor game? There is no greater accomplishment with paper and pencil than with appropriate software - well, until all the lights go out, but then you'll need a candle for your pencil, too. It's GREAT to be exploring what functions calculators contain. Do NOT let me discourage the exploration. However, there is no need to beat up people who are not up to it.

2) How did you get that payment? I can hit all around it, but not close enough for anything. Really, trying various assumptions, I get these:

--- 488.75
--- 487.83
--- 494.34
--- 495.29
--- 487.08
--- 486.17
--- 492.66
--- 493.60
--- I'm not seeing 492.09 Lay out your methods.

3) The HP-12C has [INT] and [AMORT] functions. Any decent financial calculator should have something like that. You should be able to tell it what payment number you want and it should give you those values.

4) You can get a feel for principal by starting from the back. If a loan has a $1.00 payment and interest is i per period, making interest discount v = 1/(1+i) per period, we have

--- The very last payment has v in principal
--- The next to last payment has v^2 in principal.
--- The third to last payment has v^3 in principal, and do forth.
--- Just to check, this makes the entire amortization contain this much principle: v + v^2 + v^3 + ... + v^n -- This should look familiar.
 
mtgobsessed said:
the biweekly pmt would be: 492.0917353... SO an excel spreadsheet tells me 380.25 is interest and 111.84 is principal. (onthe first payment for now)
I told you on your previous post that i = .0019012368....
200000 * .0019012368.... = 380.247... hence 380.25
492.09 - 380.25 = 111.84
Code:
000                         200000.00
001   -492.09    +380.25    199888.16
...
780                               .00
That's how it would appear on a mortgage "statement" (or schedule).
The 2nd calculation would be similarly made, but on 199888.16 instead of 200000.
By the time you get to the 780th payment, the result theoretically bring balance owing to zero.
Now if you're willing to perform 780 "by hand" calculations, be my guest!!

Sure not complicated to program such; in Basic:
100 p=492.09 : i = .0019012368 : a=200000
110 FOR n=1 to 780
120 x=a*i 'calculate interest for period
130 a=a-p+x 'update balance owing
140 PRINT n,p,x,a
150 NEXT n
 
tkhunny said:
2) How did you get that payment? I can hit all around it, but not close enough for anything.
Really, trying various assumptions, I get these:
--- 488.75
--- 487.83
--- 494.34
--- 495.29
--- 487.08
--- 486.17
--- 492.66
--- 493.60
--- I'm not seeing 492.09 Lay out your methods.
I already told him this:

200000 * i / (1 - x) = 492.09
where x = 1/(1 + i)^780
where i = (1.05^2)^(1/26) - 1

Yer makin' me nervous, TK!
 
Thanks guys, you helped me get it!!! And to boot i learned how to do it on my ti ba II plus...so now i can do in excel,on my calculator and with pen and paper...lol thanks!
 
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