break down a loan for me

[geormiet]

I'm having trouble fully understanding how mortgage payments work.

here's a hypothetical example:

I take out a $100k 30 year fixed rate loan at 7% APY.

How much interest am i paying each month? How much in interest will I have paid at the end of the 30 years? Do I pay the same amount of interest each month?

[sprmario]

At the beginning of the loan you are paying mostly interest. Each and every month as you pay down some small portion of the principal, the principal goes down and the next month you are paying slightly less interest and slightly more principal. By the end of the loan, you are paying mostly principal and only a small amount of interest. The total amt of interest paid depends on the interest rate, and I really don't feel like calculating it since that pretty much requires an amortization table (a month by month breakdown of how much principal and interest is paid for the entire life of the loan).

[jthegreat]

Hey geo. A lot of online mortgage calculators will show you amortization tables. That shows you how much of each payment is interest. [img]/images/graemlins/smile.gif[/img]

[DesertCat]

You start off paying $7k per year, or somewhere near $580 per month in interest. At least for your first month. After that, it goes down a tiny bit each month as your principle declines.

[prohornblower]

Google "amortization" calculators. There are plenty of free ones. Just type in the numbers, and voila, it will spit out a month-by-month payment table. It itemizes interest/principle.

I THINK it's usually around 14% principle/86% interest the first year or so. This is dependent on loan rate, but 7% seems about typical.

This is why I'd rather rent and save right now than buy a home. I'd rather save and plop down a bigger down payment. After a few years, you barely have any equity in your home. Plus, if you save now (say for 5 years) and buy later, you are getting a 5 year newer house.

[ElaineMonster]

You can request an amortization chart from the loan officer.

[johnd192]

To figure monthly payments:
p ( r/12 )
-----------
(1 - (1 + r/12)-m ) (where -m is the power of)

p=total principal
r=rate
m=total months

100000 ( 0.07/ 12 )
--------------------
(1 - ( 1 + 0.07 / 12 )-360 )

583.33
-------
(1- ( 1.00583)-360)

583.33
------
1 - 0.123205

583.33
------
0.876795

The payment for this loan will be $665.30 per month.
To figure the interest the formula is:

P ( r / 12 )

which equals 583.33 in the first month.
Now subtract this from your payment and you get your principal paid on the first month, which is 81.97. To get the next month principal paid you would subtract that 1st months principal paid from the original principal and plug that number into the 2nd formula. I.E. 99918.03
99918.03 ( .07/12 ) = 582.86 interest and 82.44 principal paid

Keep going for 358 more months...

[prohornblower]

Looks like by this, it's 88/12 interest/principal. I said 86/14 earlier. Either way you will accrue very little equity early in the life of the loan.

I'm assuming the last payment is 12/88 interest/principal?

That sucks that after paying like $1000, you only own $120 of your house.

[destro]

I like this one. Need the Java plug-in.
Karl's Mortgage Calculator