How could I work out my monthly mortgage payments if I only had a pen and paper?

I know I could use a simple mortgage calculator, but I am curious to know how my mortgage payment is arrived at. Is it cumulative interest plus principal divided by years and months. Please could you supply a detailed example as I not too hot with maths. For example a 拢100000 mortgage at 5% over 25 years.How could I work out my monthly mortgage payments if I only had a pen and paper?
There is a formula for the monthly mortgage payment, M, in terms of the monthly interest rate, i, the loan amount, P, and the number of months in the repayment period, n. The formula is





M = i*P * (1+i)^n / ((1+i)^n - 1)





It will probably be less confusing with a concrete example. Take, for example, your suggestion of a 100,000 mortgage at 5% interest for 25 years. That gives a monthly interest rate (i) of .05/12 = 0041666667 and a repayment period (n) of 300 months.





The first thing to do is calculate 1.0041666667 raised to the 300th power. (You will find this MUCH easier using a calculator, but you could also do it with pen and paper.) I get





1.0041666667 ^ 300 = 3.48129





Plugging this result and the other numbers into the formula, you get





M = .0041666667 * 100000 * 3.48129 / 2.48129





M = 584.59How could I work out my monthly mortgage payments if I only had a pen and paper?
A simple approach is to take the 100000 and find out how much interest you will pay the first month. (100000 x .05)/12


This gives you about 416.67 interest the first month. Then add a little principle, say 23.33 to give a total payment of 440 a month. If you need to add an escrol amount add it. This is normally property tax and insurance. This is the cost of property tax and insurance added together and divided by 12.


To figure the second months payment, subtract the 23.33 from 100000 to get 99976.67 and repeat (99976.67 x .05)/12 to get 416.57 in interest: the priciple goes up to 23.43 for a constant payment of 440 a month. Do another 298 times and hopefully the principle goes to 0. If not increase the payment until the principle does go to 0.
i can not give you the impounded interest but i do know the first step 100000.00 x 0.05 =50000 with moving the decimal point over as as in the equation would be four it looks like it would be 5000 dollars per 100,000 for the next step you will need somebody else. but 5000 x 25= 125,000 which i know is to much or should be to much because the balance always drop when payments are made on time. so i make my payments twice a month rounding up to the nearest thousand and divided in half. so far it has build up equity faster and i get at least one and half payment extra a year.