The following formula is used to calculate the fixed monthly payment, P, required to fully amortize a loan of L dollars over a term of n months at a monthly interest rate of c. NOTE: If the quoted rate for the loan is 6%, c is calculated as 0.06/12 or .005
For more information about how this works, check out the Mortgage Professor's website.
P = L[c(1 + c)n] / [(1 + c)n - 1]
P = Your fixed
L = The total loan amount in dollars.
c = The interest rate. NOTE: If the quoted interest rate is 6%, c is calculated as (0.06 / 12) ==> 0.005
n = The term (number of months) for the loan.
Let's say your loan amount is $121,200 (L = 121,200), your interest rate is: 2.875% (c = 0.02875/12), and the term of your loan is 180 months or 15 years (L = 180), then your fixed monthly payment, P, will be: $829.72
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Monthly Payment Calculator:
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