Manual

U SER ’ S G UIDE — 37
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.