Question on Amortization caculators

Say you start with a loan amount of $175K at 6.5% interest for 6 years.

you pay 31 payments of $2598.65

At the 32 payment you have a balance, including the interest up until the 7 years of $119,443.23.

Say on the same loan you extend it for 7 more years at the same interest rate. do you cacualte the payment on the $119,443.23 that includes the interest till the end of the loan, or do you caculate the principal of the loan at the end of the 31 payments and add the 6.5% to that and start the 7 years over again?

does that make sense to any one?

Thanks

Shoud be 7 yeras, typo, sorry

im not sure what kinda loans u can just say, hey i wanna extend this 7 more years at any point in time LOL j/k but true...

The MAJOR reason why u cant just say "hey gimmie an extension" is because the original terms were agreed upon an interest rate at the current market.. take a 6.5% today and it could be an 8.5% or 4.5% in 3 years... so it wouldnt make much sense for u the customer nor especially the bank to do these things.


but if I am assuming everything correctly u would prolly have to get a NEW LOAN for the 119k at a new (current) percentage rate and then who knows what ur payments or terms would be agreed to...


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if u want to assume u can still get 6.5% and ignore that all refinancing will cost u money (on cars/homes/boats.. etc) then fine.. but u mentioned to extend it ANOTHER 7 years .. did u mean 7 total? like 72months - 31 months +12 months = 7 years total or 72 months -31 months +84 MORE months?...

it surely is confusing but I do hope this helps or atleast we can find out more info as to what your asking bud

-murph

after re-reading what u said and then noticing u meant 7 years the whole way.. here is best idea I can give u

U have Loan for 175K amortized over 84 months @ 6.5% apr ... your payments should equal $2,598.65 (as u stated)

this includes principal AND interest of $218,286.72 so your paying 80.17% principal ( 175,000/218,286.72)
now multiply that by the 2598.65 payment per month and by 31 months paid in. and subtract that from 175,000 original loan.)

80.17% of 2598.65 = $2,083.34 X31 payments made in = 64,583.64 (now subtract that from 175,000 original) = $110,416.46 - this is principal balance at end of 31 payments and your new loan amount for 7 year gig your referring to

$110,416.46 is YOUR NEW LOAN AMOUNT and over 7 years (84 months) @ 6.5% interest your new payment would be = $1,639.32

as long as i understand your situation right the above info is correct....to answer one of your original questions ... u only would get a new loan on the Principal amount..Not including interest as that was for old loan and not new.. but once again this example isnt going to be exact, mainly because it doesnt include ANY closing or refinancing costs, nor affects on interest rates fluctuating.

gl and hope this helps

-murph

loans are almost always calculated based on principle.....i'm not sure at all what bigbet's example was but just take your principle and amortize the life of the NEW loan at interest rate.

I think murph did hte math

thanks, I re did it, it was 32 payments

Murphy8276 said:

after re-reading what u said and then noticing u meant 7 years the whole way.. here is best idea I can give u

U have Loan for 175K amortized over 84 months @ 6.5% apr ... your payments should equal $2,598.65 (as u stated)

this includes principal AND interest of $218,286.72 so your paying 80.17% principal ( 175,000/218,286.72)
now multiply that by the 2598.65 payment per month and by 32 months paid in. and subtract that from 175,000 original loan.)

80.17% of 2598.65 = $2,083.34 X32 payments made in = 66,666.88 (now subtract that from 175,000 original) = $108,333.12 - this is principal balance at end of 32 payments and your new loan amount for 7 year gig your referring to

$108,333.12 is YOUR NEW LOAN AMOUNT and over 7 years (84 months) @ 6.5% interest your new payment would be = $1,608.69

as long as i understand your situation right the above info is correct....to answer one of your original questions ... u only would get a new loan on the Principal amount..Not including interest as that was for old loan and not new.. but once again this example isnt going to be exact, mainly because it doesnt include ANY closing or refinancing costs, nor affects on interest rates fluctuating.

gl and hope this helps

-murph

Click to expand...

Murph, can you break this down for me.

Ok, that $108,333.12 of 7 years was paid at $1745, that is $136.31 more than the initail payment of the $1608.69.

How would you caculate the total principal balance as of Feb1 say? There was 15 payments made on this loan at the $1745, with the extra payment of $136.31 going towards the principal.

if you can email me this breakdown at bigbet1234 at the yahoo thing dot com it would be great.

I appreciate all your help.

u calculate the principal amount out of the 1745 payment your making each month and multiply that by 15 payments u made.. so lets figure this out.

U have a balance of $108,333.12 and get a loan @ 6.5% for 84 months (7 years) so real payment is $1608.69

u paid 15 months of 1745...

the principal coming off each month is = total principal /(divided by)total principal and interest of whole loan = percentage of each payment going toward principal... so 108,333.12/135,129.61 = 80.17% (same as before because same 6.5% amortization)

so take percentage X payment and then ...ADD to this the difference of what was due and what you paid...THEN multiple it all X 15(amount of payments) = your amount paid toward the principal balance.

so 80.17% X 1608.69 = $1,289.69 principal coming off each month + extra (1745- 1608.69 = 136.31) = Total of $1,426 Coming off EACH MONTH.

Multiply this by 15 months paid in = 15X 1426 = $21,390 (off of principal) so now take that number and subtract it FROM the original principal of 108,333.12 and you get a Current Balance owed of = $86,943.12 Left on Balance (current principal)


hope this helps.. i will email it too

-murph

Murphs is how i cacualted everything. but if i figure up the total interest it doesnt add up.

it started off at 43K in interest, not it is less than 18K total interest. that doesnt make sense, does it?

well ur original loan is irrelevant at this point bud.. just take the 2nd loan for example.. u borrowed roughly 108K and they charged u 135K to borrow it.. so ur interest had went down from 43K(in original loan ) to 27K in this one... besides that U paid 15 payments on this one.. so u subtract 15X319 (home much interest u pay each month a month) = $4785 ...so if u take that from the 27K ur loan started at(interest) then u have 22K left.. so only 4K off where u are saying ur interest is (18K)...

here is the main reason why. THE BIG THING that you did was you were making EXTRA payments to principal.. so in reality u lose interest off your loan...

figure it this way.. u were paying an extra 136.31 per month on ur loan (shown in previous ppost).. so X 15 months. u ran off 2044.65 off your balance... so for the next 69 months (84months -15 paid in) u have interest calculated on 2K less roughly) and it continued from payment 1 through 15 in that same manner.. (first month u had 136 less.. 2nd month u had 272$ less to charge interest on)...

in reality if u would have kept this up(or continue to) ur balance will be paid off long before the 84 months.. and that is why people are encouraged to pay extra principal because it cuts loans down 20-50% on terms/interest paid to bank.



for an easy example to picture.. lets say u paid that 1745 (or 136 extra each month for the entire 84 months).. in essence u would have stockpiled $136 X84 = $11,424 OVER what u owed the bank... so that is why when u make EXTRA payments to principal it costs u alot less interest because the bank has reserves well over what u owed at the current point in time and u cannot be charged interest on that money.

typically what is done (say this was a car loan and u had 84 payment stubs)....about payment 70 or so the bank would send u a check back and say here is the difference they owe u and ur paid in full (this is based on saving roughly 20% or so on interest by in essence "paying early")

hope this helps

-murph

.keep in mind if u did stock pile that 11,424 I pointed to above... and your payment is 1608.69 (true payment).. then ur almost 7payments ahead of the game at the end 11424/1608 = 7.1).. the reason why it turns out closer to 10-15payments saved is because of the accrued interest over time and the way apr works.(same explanation i said before.. payment 1 (u pay 136 extra) so now they cant charge interest on the 136... payment 2(u pay 136 extra) so now they cant charge interest on 2X136 or 272.. payment 3 no interest on 3X136 or 408 and so on and so forth.. before long the bank can barely charge interest at all

-murph