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What is the mathematical formula used to determine the payment amount on a mortgage?

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asked Jul 31, 2015 in Finance by LisaH (33,300 points)
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Are you sure you want to calculate this by hand? If so, here's the formula that will figure out your monthly payment amount if you can provide the amount of your loan (P), the fixed interest rate (i), and the term of the loan in months (n).  Just plug the numbers into the right-side of the equation, and you'll see how much your monthly mortgage payment (M) is over the life of the loan.

 

M = P(1+i)n i / [(1+i)n-1]

 

http://www.wikihow.com/Calculate-Mortgage-Payments

If you want to do it the easier way, use a mortgage calculator:

http://www.bankrate.com/calculators/mortgages/mortgage-calculator.aspx

answered Aug 1, 2015 by turker88 (23,620 points)
selected Aug 2, 2015 by LisaH

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