Interest+Rates

Interest Rates: > > The first step in figuring out how much you will pay in interest is to figure out the yearly interest. To do this you take the principle (100,000) and multiply it by the annual interest rate (%5.) So100,000 x .05 = 5,000. This means your yearly interest is $5,000. > > Now that you know the yearly interest you can figure out the monthly interests by dividing the yearly interest by the number of months in the year or by 12. So $5,000 dived by 12 equals $417. $417 is the amount of interest you will pay in January. > > To figure out how much of your payment will go to bringing down your principle. You take your monthly mortgage payment and subtract your interest payment. In an amortized loan of $100,000 at %5 over 30 years the monthly mortgage payment is $536. So 6 subtracted by $417 equals $119. $119 is the amount of money that will go towards the principle of the loan. > > To figure out your next month’s interest and principle payment you go through the same process except you use your new principle balance. The new principle balance is the last month’s principle minus the last month’s principle payment. So in our case to figure out the new principle you take $100,000 and subtract $119 giving you the amount of $99881.
 * An interest rate is the yearly price charged by a lender to a borrower in order for the borrower to obtain a loan. It is expressed as a percentage of the total amount loaned.
 * In other words, if a borrower can not afford to pay for something, he takes out a loan and a small percentage is added every year to the loan until he pays it back.
 * Figuring out how much interest you pay in a month is simple. Let’s say you borrowed $100,000 with an annual interest rate of %5 over 30 years and your first payment is due on January 1st.