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Are You a Mathmatics Genius or Not?

By
Real Estate Agent with Coldwell Banker Access Realty 433494

 

Are You a Mathmatics Genius or Not?

 


With This Little Trick, You're Going to Sound Like One.

 

Imagine calculating a principal, interest, tax and insurance payment for that home you're considering faster than you can find the right app on your phone.

It's actually pretty simple.

 

Here's the formula to use: Sales Price x 1% divided by 2

 

Example 1: Purchase Price = $250,000, taxes are $2,500, loan amount w/ 20% down is $200,000 at 4.50% on a 30-year fixed rate loan, insurance is $600 per year.

That's a lot of math to do, but let's try our formula:
$250,000 x 1% = $2,500, $2,500/2 = $1,250.
What's the actual payment given the real math in this instance? The answer is $1,272, a mere $22 a month difference.

 

Example 2: Purchase Price = $300,000, taxes are $3,375, loan amount w/ 20% down is $240,000 at 4.50% on a 30-year fixed rate loan, insurance is $720 per year.
$300,000 x 1% = $3,000, $3,000/2 = $1,500.
What's the actual payment given the real math in this instance? The answer is $1,557, just a $57 per month difference.

 

Example 3: Purchase Price = $500,000, taxes are $5,625, loan amount w/ 20% down is $400,000 at 4.50% on a 30-year fixed rate loan, insurance is $1,200 per year.
$500,000 x 1% = $5,000, $5,000/2 = $2,500.
What's the actual payment given the real math in this instance? The answer is $2,595, just $95 a month difference.

 

The results will vary a little based on rates, down payment, taxes, mortgage insurance, etc. However, once we've shown you the actual math for your situation, you can just add or subtract a little from the formula to compensate for any differences as they apply to you.

 

Reach out so we can calculate a sample for you. We're happy to help.

 

Posted by

P. Winston Heverly, GRI, ABR, SFR, CDPE, CIAS, PA

We service all of Palm Beach County and S. Florida

 

 513 N. Country Club Drive, Suite 200, Atlantis, FL 33462

Office: (561) 247-7376 - Fax: (561) 537-7223 - Cell: (561) 629-2660

Email: PWH@WinstonRealty.co - Web: WinstonRealty

 

Search: Atlantis, Boca Raton, Lake Worth, Palm Beach Gardens,

South Palm Beach, West Palm Beach           

 

                      

              

P Winston Heverly - Real Estate Agent

Raymond E. Camp
Ontario, NY

Good morning Winston,

By doing the math it looks like if you added two percent to the estimated  you would be a little higher and clients would be astounded.

Make yourself a great day.

Oct 10, 2015 11:02 PM
Barbara Todaro
RE/MAX Executive Realty - Happily Retired - Franklin, MA
Previously Affiliated with The Todaro Team

Good morning, Winston Heverly that's good for a quick backup system when you are not prepared to give the figure using your apps....

Oct 10, 2015 11:21 PM
Bill Roberts
Brooks and Dunphy Real Estate - Oceanside, CA
"Baby Boomer" Retirement Planner

Winston, I've been doing this for years for my own purposes, but for a client these short cuts are NOT a good idea.

Bill Roberts

Oct 11, 2015 12:43 AM
Mike Sasse
OfferPad Home Loans, LLC - Scottsdale, AZ
Sales Leader

I agree with Bill Roberts 100%. It's great if you are doing it just for your own curiosity if you are at a broker's open and want to have a quick figure in your head. Definitely would never, ever say this to a client - especially if you expect them to put less than 20% down. 

Ex. Buyer has 10% down on the $500k purchase ($450k loan - which is still conforming in my state so I'll use it for sake of argument.) That means they will most likely have higher rate, if they don't buy the rate down with points and they will have PMI. I'm not sure about you, but I dont have companies rate tables memorized - by taking a couple minutes on my app, turns out to be just over $200.

 

So now a borrower hears from the LO that he has a $300 higher payment (including the higher rate) than you had quoted. This immediately breaks the trust with the loan officer and gives the buyer a poor experience. 

Oct 11, 2015 06:55 PM