Calculate payments

Financing, Hard Money Lenders, Private Money
1

Found a few properties of interest and ready to get my first property under my belt. The question I have is when looking at HML’s how do I calculate all the numbers? How do I determine what the payments will be? Etc.

Example: found property going to auction 9/19 worth $200K. I am trying to determine my TOP BID. (some say not the ideal place to start, but who knows what will happen there and I won’t limit myself) Haven’t seen the inside of the place other than peeking in windows and see it is pretty much in good shape, just missing appliances, could use paint, carpet, possibly tiling in kitchen and landscaping (entire yard is a weed bed). (Open house is 9/16) Let’s assume no other work for now. Let’s say $10K for all repair (that may be low or high unsure right now).

The numbers:
HML - 13.88% interest only, 4 points, 70% ARV, 6 mos. How do I actually calculate the monthly payment, the overall payoff, etc.? Is this enough info? Please advise. As you can see I don’t have a great deal of time. This is obviously something I need to learn.
Thanks for all your help in advance.

2

Try one of these calculators http://mortgages.interest.com/content/calculators/index.asp

3

Thanks. I found calculators, but I was looking to [i]LEARN[i] how to calculate these numbers on paper in the event I run across a deal and have to do some quick numbers.
I always tell my kids not to rely on a calculator, guess I can’t be a hypocrite. :biggrin

4

The formula for calculating a loan payment on an amortizing loan is visually intimidating but not rocket science. Do a search on google or wikepedia and you will find the details. Your scenario is much less complicated; an interest only HML has no amortization (principal reduction) so you just multiply the loan balance by the annual interest rate and divide by 12 for the monthly payment. You can also do this for an amortizing loan as most of your payment is interest anyway, it will give you an approximation of the monthly payment.