How to Calculate Home Mortgage Loan Payments [10to5mortgage.blogspot.com]

7:01 AM  Unknown  

How to Calculate Home Mortgage Loan Payments [10to5mortgage.blogspot.com]

Potential homeowners' number one concern when buying a home is if they can afford the mortgage payments. Most people know that there will be other costs added to the mortgage payment besides the price of the home. The five factors to consider when calculating a mortgage payment are principal, interest, taxes, insurance, and term.

The principal is the amount agreed upon minus any down payment. The down payment can range from zero down to 20% down. This amount is subtracted from the cost of the home.

The interest is the bank's or mortgage company's profit for making the loan. It is determined by the many factor's including the customer's credit rating.

The tax rate is determined by the local government's appraisal on the value of the home.

The lender requires insurance on the home in case of loss due to fire or other catastrophe.

If the customer makes less than a 20% down payment, he must also buy private mortgage insurance. This pays the bank

The term is the most flexible factor in calculating a mortgage payment. The term can be 30 years or longer making the monthly payments smaller, or it can be a 15 or 20-year term, making the payments larger, but also paying off the mortgage faster.

The lender enters these numbers into a mortgage calculator to find the mortgage payment. You can find mortgage calculators that are free to use online. All you'll need are the numbers for each of these five factors to do your home mortgage loan payment.

It is also possible to find an amortization schedule to find the mortgage payment for the principal, interest, and term and then add the insurances and taxes to the total.

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Question by Eddie: Please check my C++ loan calculator home work? My code is to allow a user to enter in loan information and it outputs the total months required to repay the loan. It is also to inform the user if the monthy payment is less than the interest than the loan will not be repaid as such. I cant get my program to output the correct total amount of payments required. in some cases it will tell me one total payment and others two total payments. Also I can't get my program to give me the warning stated above. Please help me if you can. you will get credit in my code for assistance when i turn my code in My code follows: /***************************************************************************** Name: Project: Project 4 ex 19 Date: 20 Feb 12 Course: Purpose of file: Loan calculator Instructor: Assistance Recieved: ******************************************************************************/ #include using namespace std; void main() { double monthly_payment, loan_amount, interest_rate; double monthly_int_rate; int total_payments = 0; // introduction cout << "This program takes loan information entered by the user \nand calculates the total payments made." << endl << endl; // forces a user to enter a loan amount greater than zero do { cout << "Please enter your loan amount not including the dollar sign: $ "; cin >> loan_amount; cout << endl; if (loan_amount <= 0) { cout << "Please enter a vailid loan amount!" << endl << endl; } // end if statment } // closes do statment while (loan_amount <= 0); // ends do while loop cout << endl; cout << "Please enter the interest rate. \nExample if interst rate is 7.2% enter 7.2 : "; cin >> interest_rate; cout << endl; // checks for a valid interest rate if (interest_rate < 0) { do // nested loop that forces user to enter a vailid interest rate { cout << "Please enter a vailid interest rate! \nExample if interst rate is 7.2% enter 7.2 : "; cin >> interest_rate; cout << endl; } // end do statement while (interest_rate < 0); // closes do while loop } // closes first if statment else { monthly_int_rate = interest_rate / 12; } // closes else in if statement cout << "Please enter a monthly payment greater than zero : $ "; cin >> monthly_payment; if (monthly_payment < monthly_int_rate) { cout << "WARNING: This monthly payment will not allow loan to be repaid!"; } // calculates new loan amount loan_amount = loan_amount * (interest_rate / 12) - monthly_payment; // calculates until loan amount reaches zero do { loan_amount = loan_amount * (interest_rate / 12) - monthly_payment; total_payments = total_payments++; }// closes do statement while (loan_amount > 0); // closes do while loop cout << endl; cout << "You will pay " << total_payments << " monthly payments to pay off your loan." << endl; system ("pause"); // pauses program before it closes out return; } // closes main Best answer for Please check my C++ loan calculator home work?:

Answer by Unca Alby
My list of errors corrected (and my own typo corrected) 1. OK, maybe yours is different, but I believe the standard is that "main()" needs to return "int". 2. with that in mind, the "return" at the bottom must return a value. 3. This statement is screwy: total_payments = total_payments++; The compiler will attempt to work it, but it's contradictory, and can lead to unexpected results in some cases with some compilers. You're telling it to set itself to itself, then increment itself. Probably what you want is just this: total_payments++; which will simply increment the variable. 4. I think you're confusing "rates" with "amounts". In particular, you're comparing the "monthly_payment" to the "monthly_int_rate" to see if the payment is too low to ever pay back the loan. That's comparing dollars to ratios, which won't work. The correct comparison would be "monthly_payment" to be less than "monthly_int_rate * loan_amount". Thus, you're comparing dollars to dollars. 5. You input a number that's supposed to be an interest rate. The prompt example is "7.2 for 7.2%". That's fine, but you need to divide that by 100 to convert it from a "display interest rate" to a "real fraction". That is to say, 7.2% is equal to 0.072. Or put another way, 7.2% of 1000 is 72, or the same as 0.072 times 1000. 6. finally (not that this is the last error, but it's as far as I feel like going), you recalculate the "loan_amount" by multiplying it by the monthly interest rate (which you recalculate as the annual rate/12) minus the monthly payment. Your statement is this: loan_amount = loan_amount * (interest_rate / 12) - monthly_payment; So let's take a quick example. loan_amount = $ 1,000, monthly_payment = $ 100, interest_rate = 7.2%. (let's assume the rate has been properly converted by dividing by 100) loan_amount = 1000 * (0.072 / 12) - 100; simplify -- 1000 * ( 0.006 ) - 100 simplify -- 6 - 100 result, loan_amount = -94 which of course immediately kicks it out of the loop as "paid off". What you want here is first multiply the loan_amount by the monthly interest rate. Set that to, say, "this_months_interest". Add that to the loan_amount. Then subtract the monthly_payment from the loan_amount. Then you'll loop until the monthly_payment has completely subtracted away all of the loan_amount. OK, now there may be more errors in the program, but this should give you a good start towards finding them. A bit of advice: don't just code it up, go through a "walk-thru" like I just did. Put in sample numbers for each variable, then pretend to be the computer as you follow the instructions, step by step. That's a good way to find mistakes that might not be too obvious otherwise.

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