Total Loan Cost

The Total Loan Cost equation computes the true cost for a mortgage or loan including credit card debt.  The loan amount plus the fees constitutes the initial principal of the loan.  Interest is accrued on both the loan amount, which is the cost negotiated for the house and the cost of the loan fees.

NOTES

As an example, the following might be the scenario of purchasing a new home whose agreed on cost is $50,000 with a 3- year fixed interest mortgage:.

For an amount of  $50,000 loaned with $1,200 fees and closing costs,  at an annual interest rate of 6% to be paid back over 30 years;  the cost of the mortgage is the monthly payment multiplied by the number of payments (term of loan).   The cost of the mortgage is the total amount of money paid over the life of the loan.

This equation inputs the interest rate as a percentage. For the above example, one would enter 5 as the interest rate, if the loan had a 5% fixed interest rate..

The amount of  $50,000 loaned with $1,200 fees and closing costs,  at an annual interest rate 6% to be paid back over 30 years would be as follows:

The monthly payment will be  $306.97.      This payment, monthly for 30 years, will be  "the cost of the mortgage".  

The total amount of money paid over the life of the loan will be $110,509.20.