Monthly Mortgage Payment
I am by no means a mathemetician, hence the following question:
I am studying a real estate investing book, and it presents an example of how to calculate monthly mortgage payments and (before tax cash flows)
It is presented as follows:
"If you finance this property with a morgage havning a loan-to-value ratio of 80 percent at 9.5 percent interest, amortized over a term of 25 years, you figure your annual morgage payments as follows: $47,210 (V) 25.6%
.80 LTV
$376,968 Loan Amount
Given Mortgage terms of 9.5% for 25 years, the monthly mortgage factor equals $8.74 per $1000 borrowed."
I'm leaving out the rest of the example becuase the only part I don't understand is where the 8.74 per 1000 is derived from, and also the 25.6%
anyone?
thanks
mike
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If you run the mortage calculation for 100,000 for 9.5% over 25 years you'll get a payment of $874 or $8.74 per $1000.
I'm not sure where the 26% comes from or the $47,210. If I calculate 9.5% over 25 years for $376,968 I get a monthly payment of $3294 or yearly of $39,528.
What is the total purchase price of the hypothetical property? Are other expenses supposed to be included in the calc?
I'm understanding a little more and more.....HOW do you run the mortage calculation for 100,000 for 9.5% over 25 years? The $47, 210 is the NOI for the property and its value is $471, 210. Other expenses not included.
You can use any standard mortgage calculator to come up with the monthly payment. They are a dime a dozen on various investor sites. I use MS Excel with the PMT() function. You need three pieces of info: 1) mortgage amount, 2) interest rate, 3) term. Just don't forget to figure taxes, insurance, PMI, holding costs, repair costs, etc.
Roger that, have all the expenses and potential expenses already covered...this is just part of an example of how to maximize cash flows in different ways....just doing some learning and couldn't figure the math out...quite suprised this book didn't explain that particular part too well either, it's quite an informative book otherwise.
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