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Hi Bret… Thanks for providing a great service! I need to print an actual amortization schedule for a loan that closed on 10/23/07 for $107,000.00 at 6% with the first payment due on 12/1/07. The payments are $641.52 — it seems that your calculator does not allow for the interest between the closing date and the first payment…. or am I missing something? I never did have a mathematical mind… I’m sort of numbers dyslexic…..lol… A million thankeroos! Karen a/k/a hpytrvlgrl

Hi, Chef Louise. The first thing you need to know is what the P&I payment is, excluding escrow. (Escrow usually covers current taxes and insurance, and is not a loan amount to be repaid. This will be fixed/variable as tax and insurance rates/amounts change.) I plugged your principal balance, the 6% rate, 12 payments per year, and 300 remaining payments into the calculator to get a monthly P&I of $680.52. (If this doesn’t agree with your real P&I, perhaps you’ve already done some acceleration, or maybe the number of remaining payments is off by a few months.)

For acceleration purposes, the bi-weekly P&I is often just half of the former monthly P&I, so the acceleration really comes from making the equivalent of one extra monthly payment per year. So plugging $340.26 into the payment amount field, changing the payments/year to 26, and clearing the number of regular payments, the calculator shows that the payments remaining to be 547, or roughly 21 years. That’s an improvement of only 4 years, not 7, so your P&I may be different.

Now you may add $50 to the bi-weekly payment (i.e., $390.26) to see the payoff time reduced to 16.4 years, or $100 (i.e., $440.26) to see the payoff time reduced to 13.5 years. (Remember to zero out the “Number of Regular Payments” field each time you try a new payment amount.)

Hi Bret,

I have a question about my mortgage. I have a 30 year mortgage, 6% and have already paid into the mortgage for 5 years. My balance at this point is $105,621.63. My monthly payment is $1,357.24. This includes principal, interest and escrow. I have just applied to my bank to change my monthly payments to biweekly with two payments of the year (since there are 26 instead of 24) to go directly to the principal. According to Citibank, I should finish my mortgage 7 years early by doing this. If I pay an extra $50 a month, they say I should finish 9 years early and $100 a month gives me 11 years early. How can I get these figures to show on an amortization schedule so I can get a clear picture of my different options?

If you click on the “CALCULATOR” menu item at the top of the page, among the links you’ll find my derivation of the amortization formula. The last equation in that document is the basis for the calculator’s computations.

You can find other discussions of the amortization formula by Googling or visiting Wikipedia.

hi bret

great calculator , i am trying to figure out what formula is used to get to actual payment amount .

here is the problem :

loan amt 375,000 12 % rate , 5 eqaul annual payment = the calculator gives me 104028.65 per year HOW DO I GET THIS NUMBER = what is the formula please .???

Hi, Brenda. The calculator assumes that the interest compounding periods are the same as the payment periods. At present, there is no way for you to change this behavior.

So right now, the periodic interest rate is calculated by dividing the annual rate by the number of annual payment periods.

hello Thanks so very much for such a flexible tool! Can you tell me how the interest rate is compounded? We want to set Our interest rate compounded semiannually What is your set for thanks again…brenda

Hi, RJS. I’m always pleased to know that the calculator has been helpful. I find it empowering to make repayment decisions based on various test scenarios, seeing how the numbers work out.

Best wishes!

Bret,

I just wanted to thank you for creating and maintaining this calculator. I’ve got a ton of student loan debt, from several different companies, and this has been an invaluable tool in estimating repayment. Figuring out the overall effect of putting $100 extra into Loan 1 each month versus Loan 2 was difficult, until I started plugging numbers in here.

Now I feel as though I’ve got a solid grasp on things. Thank you so much!

Hi, Darlene. The calculator is limited when it comes to complicated scenarios such as the one you describe. The basic assumptions are that the interest rate and payment amount remain constant through the amortization period.

I am not an accountant or finance person, so I shall refrain from advising you about how interest should accrue during the lapse period you’ve described. This is something that might be addressed by the sales contract, so you may wish to seek out professional advice.