MCR3U Introduction To Mortgages
MCR3U Introduction To Mortgages
MCR3U Introduction To Mortgages
• For example, the monthly payment for a $200 000 mortgage at 5%/a c.s.a. with an amortization
period of 25 years is $5.82 * 200 = $1 164.
• The finance application on the TI 83+ graphing calculator can be used to determine monthly
mortgage payments. For example, to determine the monthly payment for a $200 000 mortgage at
5%/a c.s.a. with an amortization period of 25 years, we would enter the following values in the
finance application:
N = 12 * 25
I% = 5
PV = 200 000
PMT = this is what we are looking to calculate
FV = 0
P/Y = 12
C/Y = 2
PMT: END BEGIN
The result of this calculation would be a payment of approximately $1163.21, which is very close to
the payment amount using the mortgage tables earlier.
• The bal( ) routine computes the balance for an amortization schedule using stored values for I %, PV
and PMT. For example, bal (30) returns the outstanding balance after the 30th payment.
• Further analysis show that the cost of the mortgage above would be approximately:
• Mortgage payments are usually made monthly; but other lengths of time such as bi-weekly are
possible.
• Bi-weekly payments, payments made every two weeks, corresponds to 26 payments/year and not 24
payments/year. That is, paying every two weeks results in two more payments/year than paying
twice a month.
• Many people elect to make payments of ½ of what their monthly payment would be every two
weeks so that over the course of one year, they have paid the equivalent of 13 monthly payments.
• Lower interest rates, as little as 0.1%, a larger down payment along with more frequent payments,
can greatly reduce the amortization period of your mortgage and/or the size of your payments.