How To Calculate Payments Owner-Carry

How do you calculate what your monthly payment would be to the seller?

If the property is free and clear (owner-carry). How would I calculate the monthly payments owed to the seller.

Can anyone explain this to me?

Thank you.
Carol

Comments(12)

  • NewKidinTown222nd July, 2005

    What are the terms of your agreement? Your terms dictate how to calculate your payments.

  • CarolG22nd July, 2005

    SmileyFace,

    I understand now how to calculate the monthly payments, but what if the property is free and clear and I purchased the property for $100,000 and I got a LTV at 65% and had the seller/owner carry back 35%.

    How would I calcuate the term in years in paying off the the note for 35%? Does that make sense?

    Thanks.
    Carol

  • edmeyer22nd July, 2005

    Carol,

    If you have Excel or something similar on your computer that has financial functions, you can do the calculations. There are several quantities that interact with each other. They are

    Principal Value PV
    Number of Periods nper
    Interest Rate rate
    Final Value FV (0 for a fully amortized loan)
    Payment PMT

    The PMT function will calculate the periodic payment amount given the values of the other quantities.

    A 10 year loan has 10 times 12 = 120 monthly payments so nper is 120. If the initial amount of the loan is $35,000 then PV is 35000. If the annual interest is to be 6% then rate should be .06 divided by 12 which is .005. If the final amount owed after 10 years is zero then FV = 0.

    For this example the monthly payment is $388.57.
    The PMT function in Excel has the format PMT(rate,nper,pv,[fv],[type]). The arguments having [ ] are optional and the final value is assumed to be zero.

    I hope this is what you are looking for. If not, I can probably be of further help.

    Regards,
    Ed



    [ Edited by edmeyer on Date 07/22/2005 ][ Edited by edmeyer on Date 07/22/2005 ]

  • edmeyer22nd July, 2005

    Thank you, NewKid2

    You are correct. I started with a 30 year example and missed some editing! I have made the correction.

  • CarolG9th August, 2005

    Everyone!
    Thank you for your help!
    Carol

  • IBuyHousesInc9th August, 2005

    http://www.calculatorweb.com/calculators/amortcalc.shtml i use this site then you can cut and past results to an excel spread sheet

  • CarolG9th August, 2005

    Thanks for the tip!

    Carol
    Ohio

  • JGK0316th August, 2005

    Carol
    One last suggestion.
    Buy a TI BAII PLUS financial calculator ....$20.
    It does all that in a few key strokes. I input three of the 4 variables---term, r/i, PV and payment and I can solve for any one unknown.
    eg If I knew the payment, term and interest I can calculate the PV...
    eg If I knew the payment, PV and interest I can calculate the term etc etc etc

    It is much easier and more portable than a spreadsheet...and after you have done it a few times it is really simple....
    JK

  • CarolG16th August, 2005

    JK,

    Thank you.
    Carol

  • CarolG18th August, 2005

    Thanks everyone!

  • mattfish1118th August, 2005

    Carol - send me an e mail and I will respond with the amortization Table...

    matthew
    dot
    kling
    AT
    everestre
    DOT
    com

    Good Luck!

    _________________
    Matty Kling[ Edited by mattfish11 on Date 08/18/2005 ]

  • CarolG18th August, 2005

    Mat,

    Just sent you an email.

    Thanks.
    Carol

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