Mortgage

A small tool for mortgage calculation

Description

A small tool for mortgage calculation. It takes loaned capital, fixed or variable interest rate and loan years to calculate monthly payment, annual payment, total payment and end of year balance. Annual and monthly interest calculation modes are implemented.

• Acknowledgements: This submission has inspired the following:; Compute PSA-benchmarked prepayment metrics
• MATLAB release: MATLAB 7.4 (R2007a)

[Dimitri Shvorob]

How is it different from two prior similar FEX submissions? (The earliest is from 1999).

[Yi Cao]

The difference is that with the new tool you can have variable interest rate specified through the rate vector. Previous submissions only work with a constant rate.

[Dimitri Shvorob]

Your code failed to match the numbers for a sample scenario from Fabozzi (fixed-rate, level-payment, fully-amortized mortgage; loan = 100K, r = 8.125%, 30 years; you need to get a payment of 742.5), whereas MBSCFAMOUNTS of Fixed-Income Toolbox did. No surprise: you calculate annpay, not monthpay, and your monthpay is simply annpay/12, average monthly payment per year, not the actual monthly payment. Wanna fix the bug and resubmit?

[Dimitri Shvorob]

(..and annpay calculation is incorrect)

[Yi Cao]

Thanks for the comments. Two interest calculation modes, annual and monthly calculations implemented. Currently, monthly rate is calculated as annual rate/12. The results match the example given by Dimitri. However, more accurately, monthly rate should be (1+annual rate)^(1/12)-1, which will be lower than the previous calculation, hence results in lower monthly payment.

[Nandan Ramaswamy]

Useful tool

[V. Poor]