Example
A client is making monthly payments of $741 on a mortgage of $100,000 at 7.5%. How much time would the term be reduced if they added one additional payment per year?
Data Entry
Step 1: Solve the current term.
Use the following values for the prompts:
Prompt |
Value |
|
Calculation Type |
Loan |
|
Calculate |
Number of Years |
|
Loan Value |
100,000 |
|
Interest Rate |
7.5 |
|
Payments per Year |
12 |
|
Payment Amount |
741 |
|
Type of Payment |
Level Payments |
|
Annual Increase in Payment |
End of Period |
|
Balloon Payment |
0 |
Place the cursor on the # of Years prompt and click on the 'Calculate Cursor Line' button.
Result
The client currently has 23.4165 years left to pay.
Step 2: Increase the number of payments.
Change the # of Payments/Year to 13
Result
The # of Years calculates to be 19.3846, a reduction of over 4 years.
| Note: | This is only an estimation of the effects of an additional payment. Because the payments by TRAK are calculated by equally spreading out each payment throughout the year, and this will most likely not be what occurs by the client, the actual results may vary. |
