RE: Martgage Calculation Formula

Robert N. Loomas, Jr.

Aug 01, 2010 15:00 PDT

Robert:
The "problem" you are having is one of the "display rate" and rounding in
order for it to display. No matter how many places you carry the
calculation to, it will ALWAYS show a 7 at the end because of rounding.
However, as long as you use the calculation (.08/12) in the main formula for
calculating the payment (and don't round it prior to using this
calculation), the payment will come out as it should.
The basic formula is ... M = P [ i(1 + i)n ] / [ (1 + i)n  1]
M = Mortgage pmt
P = Principal
i = Interest rate (APR / 12)
n = number of pmts ((1 + i) raised to the nth power)
The above formula could be rewritten as M = P [ (APR/12)(1 + (APR/12))n ] /
[ (1 + (APR/12))n  1]
As long as you don't do a 'round' of any of the calculations before you
round the final result, the calculation will be correct.
Bob
Original Message
From: Robert DiRosa [mailto:webma@pagemaster1.com]
Sent: Sunday, August 01, 2010 11:00 AM
To: VBHel@topica.com
Subject:
Please Help with this calculation
I am currently writing a subroutine that calculates monthly loan
payments and I am having trouble with the formula which are:
<table width="60%" border="1">
<tr>
<td width="20%" rowspan="3" align="center">Monthly
Rate=</td>
<td width="60%" align="center">Rate</td>
<td width="20%" rowspan="3" align="center">x principle</td>
</tr>
<tr>
<td align="center">Rate + 
</td>
</tr>
<tr>
<td align="center">[[1 + Rate] months] 1</td>
</tr>
</table>
The rate which is 8% or .08 divided by 12 months by calculator comes out
to 0.0066666666666666666666666666666667. The formula calculates it as
0.0066666666 but I no matter how I format the number it keeps ending up
with the 7 on the end, which changes the end result. Does anyone have
any suggestions
Thank you in advance
Bobby D



