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Finding APR, Total Finance Charges
(Including Mortgage Insurance)
You are financing a mortgage of $275,000 for 30 years at a nominal,
or quoted, rate of 6.25% interest. The cost of getting the loan is
quoted as 1.5 points plus $550 in fees. What is the APR including
mortgage insurance, total finance charges, principal amount
financed, total cost, P&I payment, mortgage insurance, and PIMI
payment? Mortgage insurance is estimated at 0.65% of the loan
amount.
STEPS
KEYSTROKES
DISPLAY
Clear calculator
o o
0.00
Enter loan amount
2 7 5 ) l
275,000.00
Enter interest
6 • 2 5 ˆ
6.25
Enter term
3 0 T
30.00
Find monthly P&I payment
p
“run” 1,693.22
Enter mortgage ins. %
• 6 5 s 9
0.65
Find Loan Costs:
Recall loan amount
® l
275,000.00
Find point cost
x 1 • 5 % =
4,125.00
Add fees and find total
+ 5 5 0 =
4,675.00
Find APR*
s ˆ
“run” 7.24
Find finance charges (including
mortgage ins.*, points/fees
and total interest paid)
ˆ
392,860.03
Find amount financed
(principal minus pts/fees)
ˆ
270,325.00
Find total finance charges
plus amount financed
ˆ
663,185.03
P&I payment
ˆ
1,693.22
Mo. mortgage insurance
ˆ
148.96
PIMI payment**
ˆ
1,842.18
*APR includes mortgage insurance, if entered. Total finance charges include mort-
gage insurance over the life of the loan, to present a worst-case scenario; however,
most people can eliminate MI once a certain LTV is met.
**Payment includes estimated monthly mortgage insurance.
