Comments on: An Introduction To Compound Interest With Spreadsheets, Part 3: A Simple Mortgage Calculator http://www.thesimpledollar.com/2007/02/24/an-introduction-to-compound-interest-with-spreadsheets-part-3-a-simple-mortgage-calculator/ Simple, applicable personal finance advice for the modern world Sat, 21 Nov 2009 16:09:53 -0800 http://wordpress.org/?v=2.8.4 hourly 1 By: Daniel http://www.thesimpledollar.com/2007/02/24/an-introduction-to-compound-interest-with-spreadsheets-part-3-a-simple-mortgage-calculator/comment-page-1/#comment-478088 Daniel Wed, 14 Jan 2009 17:43:30 +0000 http://www.thesimpledollar.com/2007/02/24/an-introduction-to-compound-interest-with-spreadsheets-part-3-a-simple-mortgage-calculator/#comment-478088 Comment 12: To calculate the number of payments automatically based on any additional payments, use the NPER formula. Enter "=NPER(B5/12,B7,-B3)" in B8 and the number of payments (and interest and total cost) will be updated automatically. Comment 12:

To calculate the number of payments automatically based on any additional payments, use the NPER formula.

Enter “=NPER(B5/12,B7,-B3)” in B8 and the number of payments (and interest and total cost) will be updated automatically.

]]> By: Jasmine http://www.thesimpledollar.com/2007/02/24/an-introduction-to-compound-interest-with-spreadsheets-part-3-a-simple-mortgage-calculator/comment-page-1/#comment-379210 Jasmine Mon, 22 Sep 2008 05:50:23 +0000 http://www.thesimpledollar.com/2007/02/24/an-introduction-to-compound-interest-with-spreadsheets-part-3-a-simple-mortgage-calculator/#comment-379210 Thanks, but that didn't explain anything. What is the continuous compounded interest for $8000 compounded weekly for 1.5 years at 9%? P(1+i)^n P= 8000 r= .09 n = 78 weeks x 1.5 years = 117 i = r/m = .09/78 = .0011538 A = ? 8000(1 + .0011538)^117 = $9155.23 Annual Interest for 1.5 years is $9155.23. Solve that you suckers! Thanks, but that didn’t explain anything.
What is the continuous compounded interest for $8000 compounded weekly for 1.5 years at 9%?

P(1+i)^n

P= 8000
r= .09
n = 78 weeks x 1.5 years = 117
i = r/m = .09/78 = .0011538
A = ?

8000(1 + .0011538)^117 = $9155.23
Annual Interest for 1.5 years is $9155.23.

Solve that you suckers!

]]> By: Matt http://www.thesimpledollar.com/2007/02/24/an-introduction-to-compound-interest-with-spreadsheets-part-3-a-simple-mortgage-calculator/comment-page-1/#comment-252791 Matt Thu, 24 Apr 2008 19:53:50 +0000 http://www.thesimpledollar.com/2007/02/24/an-introduction-to-compound-interest-with-spreadsheets-part-3-a-simple-mortgage-calculator/#comment-252791 I added at the top an additional monthly principal field and just added that field to the PMT field. Now when I change the extra amount I add to pay down principal it gets applied to all the columns already created. To see how it effects your total interest and loan cost you have to scroll down your columns until you find the month with a negative (or zero) ending balance. Make note of the month number and put that number into the number of payments field (B8). Increasing my principal payment by only about 10% of my existing monthly payment shortens my loan term by 7 years and my total interest is reduced by 27%. I added at the top an additional monthly principal field and just added that field to the PMT field. Now when I change the extra amount I add to pay down principal it gets applied to all the columns already created.

To see how it effects your total interest and loan cost you have to scroll down your columns until you find the month with a negative (or zero) ending balance. Make note of the month number and put that number into the number of payments field (B8).

Increasing my principal payment by only about 10% of my existing monthly payment shortens my loan term by 7 years and my total interest is reduced by 27%.

]]> By: Bogdan http://www.thesimpledollar.com/2007/02/24/an-introduction-to-compound-interest-with-spreadsheets-part-3-a-simple-mortgage-calculator/comment-page-1/#comment-168906 Bogdan Thu, 31 Jan 2008 14:23:29 +0000 http://www.thesimpledollar.com/2007/02/24/an-introduction-to-compound-interest-with-spreadsheets-part-3-a-simple-mortgage-calculator/#comment-168906 Thanks for the article. Thanks for the article.

]]> By: Joe http://www.thesimpledollar.com/2007/02/24/an-introduction-to-compound-interest-with-spreadsheets-part-3-a-simple-mortgage-calculator/comment-page-1/#comment-47968 Joe Wed, 18 Jul 2007 18:38:29 +0000 http://www.thesimpledollar.com/2007/02/24/an-introduction-to-compound-interest-with-spreadsheets-part-3-a-simple-mortgage-calculator/#comment-47968 Hi friend, thanks for the great tutorial, it was top stuff and helped me a lot. Wouldn't it be nice if the banks only charged 1% interest. :) Hi friend, thanks for the great tutorial, it was top stuff and helped me a lot. Wouldn’t it be nice if the banks only charged 1% interest. :)

]]> By: Howard http://www.thesimpledollar.com/2007/02/24/an-introduction-to-compound-interest-with-spreadsheets-part-3-a-simple-mortgage-calculator/comment-page-1/#comment-39336 Howard Tue, 26 Jun 2007 06:35:17 +0000 http://www.thesimpledollar.com/2007/02/24/an-introduction-to-compound-interest-with-spreadsheets-part-3-a-simple-mortgage-calculator/#comment-39336 Sergio, 1. In column g12 enter Additional Principal change cell f12 to =B13-(E13+G13) And copy all the down. Now if you enter any amount in the g column it will subtract it from the ending balance. 2. Change cell b8 from =B4*12 to =B4*26 for bi-weekly or =B4*52 for weekly. Hope it helps Sergio,

1. In column g12 enter Additional Principal
change cell f12 to =B13-(E13+G13)
And copy all the down. Now if you enter any amount in the g column it will subtract it from the ending balance.

2. Change cell b8 from =B4*12 to =B4*26 for bi-weekly or =B4*52 for weekly.

Hope it helps

]]> By: Sergio http://www.thesimpledollar.com/2007/02/24/an-introduction-to-compound-interest-with-spreadsheets-part-3-a-simple-mortgage-calculator/comment-page-1/#comment-16353 Sergio Sat, 07 Apr 2007 13:38:16 +0000 http://www.thesimpledollar.com/2007/02/24/an-introduction-to-compound-interest-with-spreadsheets-part-3-a-simple-mortgage-calculator/#comment-16353 Two questions: 1. How would I add the, "Additional Principal", coloumn? 2. How could I adjust the formula to factor in making payments bi-weekly or weekly? Two questions:

1. How would I add the, “Additional Principal”, coloumn?

2. How could I adjust the formula to factor in making payments bi-weekly or weekly?

]]> By: Roger http://www.thesimpledollar.com/2007/02/24/an-introduction-to-compound-interest-with-spreadsheets-part-3-a-simple-mortgage-calculator/comment-page-1/#comment-8643 Roger Fri, 02 Mar 2007 17:43:54 +0000 http://www.thesimpledollar.com/2007/02/24/an-introduction-to-compound-interest-with-spreadsheets-part-3-a-simple-mortgage-calculator/#comment-8643 You may want to add an "additional principal" column to the spreadsheet. Putting an extra $100 a month on the loan balance will take several years off the length of the loan and decrease the total interest. You may want to add an “additional principal” column to the spreadsheet. Putting an extra $100 a month on the loan balance will take several years off the length of the loan and decrease the total interest.

]]> By: !wanda http://www.thesimpledollar.com/2007/02/24/an-introduction-to-compound-interest-with-spreadsheets-part-3-a-simple-mortgage-calculator/comment-page-1/#comment-7685 !wanda Sun, 25 Feb 2007 22:07:23 +0000 http://www.thesimpledollar.com/2007/02/24/an-introduction-to-compound-interest-with-spreadsheets-part-3-a-simple-mortgage-calculator/#comment-7685 Wow, paying that much in interest for a $180K loan is frightening. It is extremely difficult to find any property (including apartments that are condos!) within an hour's drive of where I live now that go for under $400K. My mother values property highly and is really pressuring me to buy a house, but I'm making $30K a year pre-tax as a graduate student on fellowship and have no idea how I would pay the mortgage and property tax. My possible sources of money: My rent now is $675/month (which gets me a room in a flat with 3 roommates near school); I occasionally get $1000/month from an over-invested 529 plan, if my parents don't need the money, which currently goes into my investment account; I save $500-700/month in an ING account; and I could squeeze out a few hundred more a month by eating only rice and free food. So, it's possible, but I'll be right on the edge and not saving or investing anything, and that really disturbs me. I'm not sure how I can tell my mom that buying a house is going to stress me financially and emotionally when she's so convinced that it's a good investment. Wow, paying that much in interest for a $180K loan is frightening. It is extremely difficult to find any property (including apartments that are condos!) within an hour’s drive of where I live now that go for under $400K. My mother values property highly and is really pressuring me to buy a house, but I’m making $30K a year pre-tax as a graduate student on fellowship and have no idea how I would pay the mortgage and property tax. My possible sources of money: My rent now is $675/month (which gets me a room in a flat with 3 roommates near school); I occasionally get $1000/month from an over-invested 529 plan, if my parents don’t need the money, which currently goes into my investment account; I save $500-700/month in an ING account; and I could squeeze out a few hundred more a month by eating only rice and free food. So, it’s possible, but I’ll be right on the edge and not saving or investing anything, and that really disturbs me. I’m not sure how I can tell my mom that buying a house is going to stress me financially and emotionally when she’s so convinced that it’s a good investment.

]]> By: Seth Miller http://www.thesimpledollar.com/2007/02/24/an-introduction-to-compound-interest-with-spreadsheets-part-3-a-simple-mortgage-calculator/comment-page-1/#comment-7612 Seth Miller Sun, 25 Feb 2007 02:16:23 +0000 http://www.thesimpledollar.com/2007/02/24/an-introduction-to-compound-interest-with-spreadsheets-part-3-a-simple-mortgage-calculator/#comment-7612 Yeah I thought the interest rate looked a little high in comparison to what I've seen, and I'm still a little young to be in the market, but it is still a little depressing to see that much money get put in to interest. I have a Roth IRA going and I know after five years you can pull the money to put towards your first house downpayment, what do you think about doing that? Yeah I thought the interest rate looked a little high in comparison to what I’ve seen, and I’m still a little young to be in the market, but it is still a little depressing to see that much money get put in to interest. I have a Roth IRA going and I know after five years you can pull the money to put towards your first house downpayment, what do you think about doing that?

]]> By: Tim http://www.thesimpledollar.com/2007/02/24/an-introduction-to-compound-interest-with-spreadsheets-part-3-a-simple-mortgage-calculator/comment-page-1/#comment-7608 Tim Sun, 25 Feb 2007 00:50:14 +0000 http://www.thesimpledollar.com/2007/02/24/an-introduction-to-compound-interest-with-spreadsheets-part-3-a-simple-mortgage-calculator/#comment-7608 This is an excellent post. Thanks Trent This is an excellent post.

Thanks Trent

]]> By: Trent http://www.thesimpledollar.com/2007/02/24/an-introduction-to-compound-interest-with-spreadsheets-part-3-a-simple-mortgage-calculator/comment-page-1/#comment-7603 Trent Sun, 25 Feb 2007 00:10:29 +0000 http://www.thesimpledollar.com/2007/02/24/an-introduction-to-compound-interest-with-spreadsheets-part-3-a-simple-mortgage-calculator/#comment-7603 That's correct, given the assumptions above. Note that I am using an interest rate of 8%, though, and if your credit is okay at all you can get lower than that. For instance, if your rate is 6.25%, your monthly payments are only $1,108.29, which gives you a total cost of just south of $400K. If you want to run other numbers, try building the calculator. This is also a good reason to consider paying in cash rather than getting a loan, because with those same payments into a 5.05% savings account, you'll be able to cut a check in about twelve years (assuming housing prices stay stable). As Jason mentioned, this is a simple view. We're also not including PMI, insurance, and maintenance either. That’s correct, given the assumptions above. Note that I am using an interest rate of 8%, though, and if your credit is okay at all you can get lower than that. For instance, if your rate is 6.25%, your monthly payments are only $1,108.29, which gives you a total cost of just south of $400K. If you want to run other numbers, try building the calculator.

This is also a good reason to consider paying in cash rather than getting a loan, because with those same payments into a 5.05% savings account, you’ll be able to cut a check in about twelve years (assuming housing prices stay stable).

As Jason mentioned, this is a simple view. We’re also not including PMI, insurance, and maintenance either.

]]> By: Jason http://www.thesimpledollar.com/2007/02/24/an-introduction-to-compound-interest-with-spreadsheets-part-3-a-simple-mortgage-calculator/comment-page-1/#comment-7600 Jason Sat, 24 Feb 2007 23:42:35 +0000 http://www.thesimpledollar.com/2007/02/24/an-introduction-to-compound-interest-with-spreadsheets-part-3-a-simple-mortgage-calculator/#comment-7600 That Total Loan cost doesn't take into account that you will be able to deduct some of the interest from your taxes. Also a home will appreciate over 30 years. That Total Loan cost doesn’t take into account that you will be able to deduct some of the interest from your taxes. Also a home will appreciate over 30 years.

]]> By: Seth Miller http://www.thesimpledollar.com/2007/02/24/an-introduction-to-compound-interest-with-spreadsheets-part-3-a-simple-mortgage-calculator/comment-page-1/#comment-7599 Seth Miller Sat, 24 Feb 2007 23:30:35 +0000 http://www.thesimpledollar.com/2007/02/24/an-introduction-to-compound-interest-with-spreadsheets-part-3-a-simple-mortgage-calculator/#comment-7599 Is that really right that a 180k loan would cost you around 450k over the life of the loan? That really doesn't make me want to buy a house. Is that really right that a 180k loan would cost you around 450k over the life of the loan? That really doesn’t make me want to buy a house.

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