A $176,000, 15 year loan

[bacon333]

$176,000 loan
15 years
5.875%

$1473.33 / month

At the end of 15 years, the bank should make around $265,199.40

5.875% of 176,000 is about $10k, where the heck is the other $80k coming from?

 

[vi edit]

Familiarize yourself with the concept of compound interest.

 

[waggy]

yeah looks fine to me.

 

[Splork]

You can't take 5.875% and multiply it by the amount of the loan. I believe the equation is something like A = P(1+[i/q])nq. Don't quote me on it.

-sp

 

[EKKC]

thats about right

a 15yr 100,000k mortgage for me at 5.25% gets me a monthly payment of a little bit more than 800

 

[mugs]

5.875% is the annual interest rate, not the total interest over the life of the loan.

 

[waggy]

Originally posted by: mugs
5.875% is the annual interest rate, not the total interest over the life of the loan.

yeah but it would be nice if they only took it once!

save me a lot of moneyh.

 

[thomsbrain]

Originally posted by: vi_edit
Familiarize yourself with the concept of compound interest.

QFT.

you are paying 5.875% EVERY YEAR on your remaining balance (calculated and pro-rated monthly, though). as your balance shrinks, the amount of your payment going to paying interest shrinks, and the amount going to paying down your loan increases. at the beginning, your payment is almost entirely devoted to paying interest, which is accumulating at a blistering pace.

i suggest you plug those numbers into the calculator at bankrate.com and hit the "show payment schedule" button or whatever it says. that will give you a breakdown of what is happening on each payment and help you understand this concept a little better.