# Thread: time value of money help mortgage constant

1. ## time value of money help mortgage constant

having trouble solving the following problem..there is no interest rate given?? anyone know a formula/answer

whats the monthly mortgage constant on a 20yr mortgage loan of $75000 requiring payments of$500 per month?

2. ## mortgage rates

Put up the formula that you know for calculating monthly payment.

3. ## mortgage constant problem ..thanks

the formula for mortgage constant

_____r_____
1-[1/(1=r)n ]

on my financial calculator i entered pv=75000 n=20 pmt(-500) to find the interest 14.45% then entered p/y= 12 pv=-1 n=240 IY=14.45 and got .01 as the constant...not right..thanks for any help im really stuck

4. ## monthly payment loan

I need a formula for calculating monthly payment as well.

I'll do my best

5. ## math mortgage constant

this might help and thanks so much for your time

r=the annual interest rate
n=number of years

• You borrow $100,000 to buy a parcel of real estate. The annual interest rate is 10% and the loan is to be repaid with annual payments (including principal and interest) over the next 10 years. How much will your payments be? Keystrokes Display Comments CE/C CE/C 0.00 Clears display 2nd CLR TVM 0.00 Clears TVM variables 100000 +/- PV PV = -100,000.00 Stores original loan amount 10 N N = 10.00 Stores number of periods 10 I/Y I/Y = 10.00 Stores the interest rate CPT PMT PMT = -16,274.54 Annual payment Solving for Monthly and Annual Loan Constants • You are offered a 10-year, monthly payment loan at 10% annual interest. Calculate the monthly loan constant (i.e., the monthly payment per$1 of loan amount) and the annual loan constant (the annual payment per $1 of loan amount). Keystrokes Display Comments 2nd P/Y PY = 1.00 12 ENTER PY = 12.00 Sets number of payments per year at 12 CE/C CE/C 0.00 Clears display 2nd CLR TVM 0.00 Clears TVM variables 1 +/- PV PV = -1.00 Stores original loan amount 10 x 12 = 120 N N = 120.00 Stores number of periods 10 I/Y I/Y = 10.00 Stores the interest rate CPT PMT PMT = .0132151 Monthly loan constant x 12 = .1585809 Annual loan constant • Monthly payment:$100,000 x .0132151 = $1,321.51 • Annual payment:$100,000 x .1585809 = $15,858.09 6. The mortgage constant represents the amount of each periodic loan payment expressed as a percentage of the original loan, necessary to pay the contract rate of interest and the entire principal in equal periodic installments over the term of the loan. The mortgage constant is sometimes called the installment to amortize since it is the periodic payment necessary to repay a loan of$1 completely without resorting to a balloon payment. Thus, the mortgage constant is always the periodic payment for a loan of $1 expressed on an annual basis. So wouldn't this mean that you take the payments of$500 per month and divide by the total loan amount \$75000?

500/75000 = .006666...

NO, because I am not accounting for it being on an annual basis

maybe try (500*12)/75000 = .08

Is this correct?

7. Originally Posted by davidaross
the formula for mortgage constant

_____r_____
1-[1/(1=r)n ]

on my financial calculator i entered pv=75000 n=20 pmt(-500) to find the interest 14.45% then entered p/y= 12 pv=-1 n=240 IY=14.45 and got .01 as the constant...not right..thanks for any help im really stuck
This formula works well... I recommend you to use this one..