Mortgage Mathematics Online

The Architecture of Interest: An Analysis of Mortgage Mathematics

The term "amortization" comes from the Old French amortir , meaning "to kill." In finance, it refers to "killing off" a debt over time. mortgage mathematics

M=Pr(1+r)n(1+r)n−1cap M equals cap P the fraction with numerator r open paren 1 plus r close paren to the n-th power and denominator open paren 1 plus r close paren to the n-th power minus 1 end-fraction = Total monthly payment P = Principal loan amount r = Monthly interest rate (annual rate divided by 12) n = Total number of payments (months) 2. The Amortization Process The Architecture of Interest: An Analysis of Mortgage

To calculate the monthly payment for a standard fixed-rate mortgage, we use the : Unlike fixed-rate loans, ARMs use a variable

The mathematics becomes more complex with . Unlike fixed-rate loans, ARMs use a variable