February 4th, 2014 by Gary Mawson Jr.
When I started writing mortgages all of the mortgage loan officers had an HP mortgage calculator. I was not fortunate enough to have one, so I had to go with an alternative way of calculating what the payment was. So I turned to the computer to help me out. When I started all of the interest rates were above 6%, so when I was looking at a price per $1000 chart I quickly realized that 6%=$6.00/$1000. So simply put if you have a home that you were going to mortgage 100K, you would have a principal and interest payment of $600. Pretty easy right?
So how do I calculate the rest of the interest rates? This is very easy too but may require some quick notes in the beginning. For each 1/8(.125) of a point it equates to .08 cents in payment per $1000. So an example is if the rate was 5.875% for the same 100K mortgage than the payment would be based $592 per month. ($5.92 x100K). So from there you can simply take that and apply .08 for each number and figure it out. Since the mortgage rates go in one eigth increments, it is easy to figure out. See chart below as example all are per $1000 mortgaged.
6% – $6.00
5.875% – $5.92
5.75% – $5.84
5.625% – $5.76
You got the trend now?
So what if my interest rate is 5%?
simple…. you know that there are 8 parts, so you simply multiply 8 by .08 cents which .64 cents. Than subtract that from $6.00 to come to $5.36/$1000.
This is how you can quickly figure out mortgage calculations on the go with a simple calculator. I kept round numbers, but you can figure out all of the results simply by following this diagram and just memorizing that 6% =$6.00, and that each 1/8=$.08!
Please note: This is not an exact science to coming up with the mortgage calculations, but it will get you within a couple dollars every time.
Let me know if you have any questions or feel free to comment.