Thanks to everyone in the group for your responses. You helped me a lot.

This is one of the best groups I have ever "hovered" over.

Thanks again,

JW

JW wrote:
- quote -

Here's an excel spreadsheet that you can extract the equations from:

http://www.mtgprofessor.com/Spreadsheets/Xtrapmts.xls

Regards,
Chris

JW wrote:

- quote -

Its very simple, and John Weeks has already given the answer, but I
will give it again just in case you missed it.

The amount of a monthly payment which is applied to interest is simply
the amount of interest that accrued that month on the principal
balance. So, the formula is:

(Annual interest rate/12)*(Principal balance) = Amount of payment
applied to interest.

I have written a number of spreadsheets which show the monthly ratio of
principal and interest over the life of a loan taking into account any
number of lump sum payments. Create rows for:
1: principal balance
2: monthly payment amount
3: interest portion of payment
4: principal portion payment
In a separate area of the spreadsheet make a single cell for the
interest rate (call it A5).

Then make the first column for Month 1 (call it column B)
B1: is the original principal balance
B2: is the monthly payment amount;;
B3: interest portion of payment = ($A$5/12)*B1;
B4 = principal portion of payment = B2-B3.

Then make the second column for Month 2, column C
C1: Principal balance = B1-B4;
C2: Monthly payment amount;
C3$A$5/12)*C1;
C4: C2-C3

Then copy column C out to month 360, or whatever is appropriate for the
length of the loan. You should see that the principal balance goes to
zero right on schedule, which is your assurance that the spreasheet is
functioning properly. Then you can pop in lump sum payments in any
month(s) you feel like, and you will instantly see what the new ratio
of principal/interest is and also how much sooner the loan is paid off.

Andy

jw wrote:
- quote -

Do a search on line for annuity formulas. Or get a copy of a text book
like "The Theory of Interest" by Stephen Kellison.

It's not a simple formula and the notation used to express it can't
be written via my text email. This is particularly true if you
intend to solve for the remaining number of payments after having made a
lump sum payment toward the principal during the term of the loan.
This latter formula involves ln(x).

The basic formula you need is the present value of an annuity
payable at the end of the month(immediate or ordinary annuity) with
a nominal annual interest rate convertible monthly.

Frank

In article <CAI%d.9530$wL6.4982[at]trnddc03> , "jw" <jw[at]unearthly.netwrote:
- quote -

Each month, the interest is the principal times interest rate times
amount of time. You need to compute it each month since it is
a formula where the output of one step is the input of the next
step.

For example, on a unit I own, the payment is $599.17 a month, and my
interest rate is 5.375%. The balance is $104,366.07.

Interest = 104366.07 x .05375 x 30 / 360 = $467.48

My principal payment is $599.17 - 467.48 = $131.69

My new loan balance is $104,366.07 - $131.69 = $104,234.38

In real life, it gets much harder. Some loan companies base
the calculations on the day they receive the payment rather
than on the due date, which means that you have to know the
specific date that all the payments are made on. Beyond that,
many loans are interest only, and you have to know the future
interest rates to compute the payments.

-john-

--
================================================== ====================
John A. Weeks III 952-432-2708 john[at]johnweeks.com
Newave Communications http://www.johnweeks.com
================================================== ====================

"John A. Weeks III" <john[at]johnweeks.com> wrote in message
news:john-CC0D7A.11452121032005[at]ip-lcc.supernews.net...
- quote -

program.
Given the remaining principal, along with the other parameters of the loan,
how do you calculate the amount of principal and interest for the remaining
payments after a lump-sum payment.
I'm writing a program that need to create a mortgage schedule which includes
arbitrary lump-sum payments.

Thanks,
JW

"Chris" <chris_in_sunnyvale[at]yahoo.com> wrote in message
news:1111432026.226278.313900[at]g14g2000cwa.googlegroups.com...
- quote -

uses. I need this to write a program that creates a mortgage schedule that
includes an arbitrary lump-sum(s) payment(s).
Given the remaining principal, and the other parameters of the loan, how do
I calculate the principal and interest portions of the future payments.

JW


======================================= MODERATOR'S COMMENT:
Please trim the post to which you are responding. "Trim" means that except for a few lines to add context, the previous post is deleted.

Rich Carreiro" <rlcarr[at]animato.arlington.ma.us> wrote in message
news:m3k6o1c70c.fsf[at]animato.home.lan...
- quote -

program.
Given the remaining principal, along with the other parameters of the loan,
how do you calculate the amount of principal and interest for the remaining
payments after a lump-sum payment.
I don't need a calculator I need some fomula that I use in a program I am
writing for the general case.
I searched over the net but come up with a lot of calculators but no where
does it describe how it was done.
Any help is appreciated.

JW


======================================= MODERATOR'S COMMENT:
Please trim the post to which you are responding. "Trim" means that except for a few lines to add context, the previous post is deleted.

"John A. Weeks III" <john[at]johnweeks.com> writes:
- quote -

Your monthly payments do not change.

- quote -

Each payment you make consists of some principal and
some interest. If you've made a big lump sum payment,
then your outstanding balance has been diminished. Thus,
the interest you owe each month becomes less - the
difference between the interest you owe each month and
the fixed payment you make - that's the amount of your
monthly payment which is applied to principal.

- quote -

Exactly.

Actually, if you get an annual statement from your
mortgage company which breaks down how each of your
monthly payments was applied to principal and interest,
you'll note that each month - from the very first
month of your mortgage onwards - each month, the
proportion of principal and interest changes. Each
month, when you pay some principal, your outstanding
balance goes down, etc. etc. A lump sum principal
payment just accelerates this.

Making a big lump sum payment as principal will not
change your monthly fixed payment. But you will
finish paying it off way sooner. *AND* - in the
meantime, you will be paying less interest and
more principal each month - this is important because
you may have adjusted your withholding on the assumption
that you'd be getting a huge tax deduction due to all
that interest you are paying. If you pay your mortgage
down substantially, you will be paying less interest
each month and more principal each month - and principal
payments are, of course, *not* deductible on your taxes.

- quote -

That's pretty important, too...



--
Plain Bread alone for e-mail, thanks. The rest gets trashed.
No HTML in E-Mail! -- http://www.expita.com/nomime.html
Are you posting responses that are easy for others to follow?
http://www.greenend.org.uk/rjk/2000/06/14/quoting

jw wrote:
- quote -

This calculator does the trick:

http://www.decisionaide.com/mpcalcul...aPayments1.asp

Regards,
Chris

In article <MBB%d.15110$oa6.2034[at]trnddc07> , "jw" <jw[at]unearthly.netwrote:

- quote -

While it doesn't effect the payment amount, it will slightly
change the ratio of the principal to interest from then on.
That is why the mortgage ends early--you have less principal
outstanding, so the interest fees are less. But your payment
will stay the same amount each month--the lending company
is not going to re-amortize the loan. You will see no
different in the payment, but the lender's computer will
notice a small difference in the payment components.

-john-

--
================================================== ====================
John A. Weeks III 952-432-2708 john[at]johnweeks.com
Newave Communications http://www.johnweeks.com
================================================== ====================

"John A. Weeks III" <john[at]johnweeks.com> wrote in message
news:john-18CF12.06171121032005[at]ip-lcc.supernews.net...
- quote -

Thanks,
That simplifies my life somewhat. I somehow thought that since the
principal was reduced the component parts of the payment would change, i.e.
a greater portion of the payment would go toward the principal.

Thanks again,
JW

- quote -

"jw" <jw[at]unearthly.net> writes:

- quote -

Here's a way to approximately (but a good approximation) find
out what happens:
(1) Get an amortization table for your mortgage from your bank or
an on-line mortgage calculator or whatever.
(2) Get your loan balance immediately after making the principal payment.
(3) Look down the amortization table until you find the month where
the balance in the table equals your new, post-lump-sum-payment
balance.
(4) That place in the table is essentially where you now are
in your loan. The effect of a lump-sum-principal payment
is move you "forward" in time to that spot.

To sorta give an example (**using made-up numbers**):
Let's say you have a $300,000 30-year mortgage which ends in 2030
and have $290,000 left on it. You make a $50,000 principal
payment, reducing your balance to $240,000. You look down your
amortization table and find out that in March 2015 the table says
there would be a $240,000 balance. Well, that's what your
payment did -- in terms of the life of the loan, today is now
March 2015, which means there are now only 15 years left on the
loan, and the principal and interest portions of your next
payment will be given by the table entries for March 2015, the
principal and interest portions of the payment after that will be
given by the table entries for April 2015, and so on.

--
Rich Carreiro rlcarr[at]animato.arlington.ma.us

In article <hdu%d.11114$GI6.5965[at]trnddc05> , "jw" <jw[at]unearthly.netwrote:

- quote -

It doesn't affect the payments in any way, at least not on a
traditional mortgage. What it does do is shorten the term of
the mortgage on the back end. That is assuming you made this
lump sum payment as principal. If you didn't specify that
it was for principal, then the lender would treat it as
payments made in advance. In that case, you would not have
any payments due for a while.

-john-

--
================================================== ====================
John A. Weeks III 952-432-2708 john[at]johnweeks.com
Newave Communications http://www.johnweeks.com
================================================== ====================

Suppose I have an existing 30 year mortgage and decide to make a lump-sum
payment in the 5th year of the mortgage.
How does this affect the payout schedule after the lump sum payment is made
in terms of the amount of my payment that is applied to the principal and
the amount that paid in interest.
How does one calculate this?

Thanks,
JW