pds@tove.UUCP (Dave Stotts) (11/19/85)
By now we all should realize the way that the bi-weekly mortgage payments
shorten the payback period, i.e., by causing 13 monthly payments per year.
When I first heard of such things, I tried a few mortgage calculations to
see how much can be saved by making semi-monthly payments, and saving the
1/2 month interest on the little bit of principal paid the first half
month. Here are the results... I have elided the middle of the amortization
tables since the bottom line is the important one. I was surprised at
the trivially small savings: $85 over 30 years!
Dave Stotts
Univ. of Maryland Computer Science
===========================monthly payments==============================
$90,000 at 12%, 30 years, 12 payments per year
monthly p&i: 925.75
period period cumulative cumulative
year interest principal interest principal
1 897.02 28.73 10782.42 326.59
2 893.38 32.37 21523.43 694.60
. . .
29 112.33 813.42 242580.87 79580.60
30 9.17 916.59 243270.48 90000.00
========================semi-monthly payments==============================
$90,000 at 12%, 30 years, 24 payments per year
semi-monthly p&i: 462.76
period period cumulative cumulative
year interest principal interest principal
1 448.45 14.31 10781.73 324.47
2 446.63 16.13 21522.20 690.19
. . .
29 54.25 408.51 242520.86 79558.85
30 2.30 460.46 243185.91 90000.00
============================================================================john@hp-pcd.UUCP (john) (11/29/85)
<<<<< < I was surprised at the trivially small savings: $85 over 30 years! < < Dave Stotts < Univ. of Maryland Computer Science < You also have to subtract an extra $79.20 for the additional 360 $.22 stamps you need for bi-monthly payments.You save $5.80. John Eaton !hplabs!hp-pcd!john (unless of course postage rates rise in the next 30 years,or you itemize your taxes or have to buy your own envelopes. Then you will lose money.