Mathematical Mortgage Formula
One of the biggest questions people have when they are on the market for a new home is what mathematical mortgage formula to use to figure out their payments.
A simple mathematical mortgage formula that will help you figure out how much you will owe each month works as follows.
First you need to figure out what the average mortgage interest rate is at any given time. Let’s say it’s 6.5% and the balance on your loan (after the down payment) is $400,000.. What you need to do is move the decimal point over twice to the left and multiply it by the total you will owe on your home loan (after the down payment).
In this case that would like this:
400000
X .935
——-
26000
As you can see the amount is $26,000. Divide that by twelve and you have your monthly payment which in this case would be $2166.67. However this mathematical mortgage formula doesn’t factor in home owners insurance or property tax as they vary in each state so be sure you take that into consideration.