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I bought some land for 45k. I paid 15k and the seller will carry note. So I have a 5 year 30k loan 6% per annum interest. My monthly payments are 579.98 a month for 5 years. If I make bigger monthly payments how do I calculate the interest or how much to pay off? For example lets say I pay off the loan in 2 years 4 months how do I know how much interest to pay? Thanks guys Im such a noob.
I would imagine you can use an amortization calculator and plug in all the info as it changes to see where you are. (Mortgage amortization schedule calculator - Bankrate.com)We play around with this one. Hope it helps you.
Interest payments are made monthly--except on rare occasion (and you'd be foolish to calculate and pay your interest in any other way except monthly).
At this point, you do not really need an amortization calculator unless you're trying to determine how much your payment needs to be each month in order to pay off the loan in a specified time. Your anticipated monthly payment of $579.98 has obviously already been determined using an amortization schedule. That monthly payment--which includes both principal and interest--indicates that if you make every payment on time as scheduled, by the end of five years you will totally have paid off the principal amount owing. Your balance owed will be zero.
Of course, any monthly payment which is made in excess of the scheduled payment will shorten the time needed to pay off the loan. It is relatively easy to calculate the amount of interest which is included in each monthly payment.
For your first payment, you simply multiply $30,000 by .06 (6%) and divide by 12 to get the amount of interest for that one month. You might as well round off your payment to $580 (or higher), so of your $580 payment, $150 would be interest and the balance of $430 would be applied to the principal owed.
For the next month, interest would be calculated in the same fashion based upon the new balance owed of $29,570 ($30,000 less $430). The good thing about payments made in excess of the monthly minimum is that the excess payment is applied entirely to reduce the principal balance owed. For your loan, you should receive a sheet from the loan holder showing the amount paid each month, the interest amount included for each payment, the amount of principal paid and the new principal balance. You need to double-check their figures every month. Taxes, of course, need to be paid for separately since they are not included in your monthly payment.
My questions to you, however:
Are property taxes paid up-to-date and were the taxes prorated at time of closing?
Are there any liens on the property?
Did you receive a title insurance policy for the property?
Did you receive the Deed to the property, or is this a Land Contract purchase (aka Contract for Deed)?
I hope that you had an experienced real estate attorney oversee your purchase. If not done correctly, owner-financed deals can be very problematic.
Last edited by jackmichigan; 10-26-2014 at 07:50 PM..
Interest payments are made monthly--except on rare occasion (and you'd be foolish to calculate and pay your interest in any other way except monthly).
At this point, you do not really need an amortization calculator unless you're trying to determine how much your payment needs to be each month in order to pay off the loan in a specified time. Your anticipated monthly payment of $579.98 has obviously already been determined using an amortization schedule. That monthly payment--which includes both principal and interest--indicates that if you make every payment on time as scheduled, by the end of five years you will totally have paid off the principal amount owing. Your balance owed will be zero.
Of course, any monthly payment which is made in excess of the scheduled payment will shorten the time needed to pay off the loan. It is relatively easy to calculate the amount of interest which is included in each monthly payment.
For your first payment, you simply multiply $30,000 by .06 (6%) and divide by 12 to get the amount of interest for that one month. You might as well round off your payment to $580 (or higher), so of your $580 payment, $150 would be interest and the balance of $430 would be applied to the principal owed.
For the next month, interest would be calculated in the same fashion based upon the new balance owed of $29,570 ($30,000 less $430). The good thing about payments made in excess of the monthly minimum is that the excess payment is applied entirely to reduce the principal balance owed. For your loan, you should receive a sheet from the loan holder showing the amount paid each month, the interest amount included for each payment, the amount of principal paid and the new principal balance. You need to double-check their figures every month. Taxes, of course, need to be paid for separately since they are not included in your monthly payment.
My questions to you, however:
Are property taxes paid up-to-date and were the taxes prorated at time of closing?
Are there any liens on the property?
Did you receive a title insurance policy for the property?
Did you receive the Deed to the property, or is this a Land Contract purchase (aka Contract for Deed)?
I hope that you had an experienced real estate attorney oversee your purchase. If not done correctly, owner-financed deals can be very problematic.
Thank you for the response. This was exactly what I was looking for. In response to your questions.
Taxes are up to date.
No liens on the property
I have the title insurance policy
The deed is being sent...I just bought the land a few weeks ago
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