3. Calculating monthly mortgage payments

We start with an example problem you can set up in the online calculator and solve to ensure you have it set up correctly. Then change the numbers to answer the questions below.

Example Problem:We want to know our monthly payment on a $90,000 mortgage loan at 6.5 percent for 30 years

PV:90,000

Rate:6.5%

PMT:leave blank because this is what you are solving for

Periods:360 (Because we are calculating a monthly amount, we multiply the number of years by 12)

FV:0 (because we are paying down the loan, we start with $90k as our present value and end with $0)

If you set up the problem correctly, you should be able to solve for the monthlypayment = $568.86.

Note:Because we are using an annual rate but compoundingmonthly, you'll need to change the compounding period on the online calculator to monthly.

Now it's your turn! Following the example above, find the monthly payment on each of these loans:

Loan #1 $97,500 at 5 percent for 15 years(15 times 12 = 180 periods)

PMT =

Loan #2 $125,000 at 5.5 percent for 20 years(20 times 12 = 240 periods)

PMT =