Texas instruments BA REAL ESTATE Guidebook
BA Real Estate™
Financial Calculator Guidebook
Key Index
To find information about a specific key, refer to the page
number next to the key.
ON/C
84
88 85 46 29 84
2nd
N
16 17 17 16
16 16 16 16 16
TERM
V1
69 69 69 69 89
53 90 89
QUAL INC
TAX&INS$
29
2
89 40 32 74
x
INS %
18
92
STO
TAX %
18
92
RCL
DEBT %
18
87
18
INC %
87
000
CPT
P/Y
I%
V2
QUAL LA
NOM
BI-WKLY
AMORT
LOAN PMT
#PD
52 29
PRICE
EFF
72 72 72
ARM APR
PITI
BGN/END
APPREC
%
PDS/YR
789
456
123
91 86
ROUND
0
FIX
폷
BUSINESS ANALYST
쎵앛앥
89
OFF
CLR TVM
FV
x
앦
쎹
앥
쎵
쏁
89
89
89
89
BA Real Estate
FINANCIAL CALCULATOR
GUIDEBOOK
Guidebook Developed by:
The staff of Texas Instruments Instructional
Communications
With Contributions by:
Dave Caldwell
Charlotte Clark
Bob Fedorisko
Mike Keller
Jackie Quiram
Tammy Richards
Gary Rouse
é
This digital apparatus does not exceed the Class B limits
for radio noise emissions from digital apparatus set out in
the Radio Interference Regulations of the Canadian
Department of Communications.
© 1993, 1996 Texas Instruments
Table of Contents
This guidebook begins with a section designed to help
you quickly learn about the BA Real EstateTM calculator
and its capabilities. The remainder of the book contains
examples of and information about specific kinds of
financial calculations. General calculator operation and
service information are discussed in the Appendix.
Getting Started
Chapter 1:
Mortgages and
Amortization
Getting Started ....................................................................... 5
FInding the Monthly Payment on a Loan ............................ 6
Calculating Total Payment (PITI) ........................................ 7
Amortization for the First Year ............................................ 8
Finding a Pay-off Balance ..................................................... 9
Changing the Conditions of the Loan ................................ 10
Estimating Appreciation...................................................... 11
Qualifying a Buyer for a Loan............................................. 12
Going Further ....................................................................... 14
The Time-Value-of-Money (TVM) Model ........................... 16
Changing TVM Settings ....................................................... 17
Setting Default Rates for Your Area .................................. 18
Calculating Down Payments............................................... 19
Computing a Monthly Mortgage Payment......................... 20
Finding the Unpaid Balance on a Mortgage...................... 22
Paying Off a Loan with Larger Payments.......................... 24
Calculating a Balloon Payment .......................................... 26
Finding the Payment for a Mortgage with a Balloon ....... 28
Total Payment Including Taxes and Insurance (PITI)..... 29
Computing Total Payment (PITI)....................................... 30
Adjustable-Rate Mortgage (ARM) ...................................... 32
Finding Periodic Payments for an ARM ............................ 33
Comparing an ARM to a Fixed-Rate Mortgage................. 36
Bi-Weekly Mortgage Payments........................................... 40
Calculating a Mortgage with Bi-Weekly Payments .......... 42
Finding the Balance on a Canadian Loan.......................... 44
Amortization (AMORT) ....................................................... 46
Finding the Principal and Interest Paid............................. 47
Chapter 2:
Buyer
Qualification
Buyer Qualification: Maximum Loan Amount .................. 52
Buyer Qualification: Minimum Income Required............. 53
Finding the Qualifying Loan Amount................................. 54
Finding the Minimum Income Required............................ 56
Finding the Maximum Allowable Debt.............................. 58
Finding the Net Cost of Housing ........................................ 60
3
Chapter 3:
Other Financial
Tools
Finding the Future Value of a Lump Sum.......................... 64
Saving for the Future with Regular Deposits.................... 66
Percent Change and Appreciation Model.......................... 69
Calculating Percent Change and Appreciation................. 70
Interest Conversion Model.................................................. 72
Annual Percentage Rate (APR) .......................................... 74
Finding the APR of a Refinanced Loan.............................. 76
Pricing a Note to Meet a Required Yield ........................... 78
Calculating the Yield of a Discounted Mortgage .............. 80
Finding the Net Selling Price after Commission .............. 82
Appendix
Effects of Turning the Calculator On and Off................... 84
The Display and Indicators ................................................. 85
Setting the Fixed-Decimal Format..................................... 86
Entering Numbers and Clearing the Calculator ............... 87
Calculations .......................................................................... 88
Basic Arithmetic................................................................... 89
Percent Calculations............................................................ 90
Rounding Results ................................................................. 91
Using Memory....................................................................... 92
Battery Information ............................................................. 93
Support and Service Information....................................... 94
Warranty Information.......................................................... 95
4
Getting Started
Setting
Beginning- or
End-of-Period
Payments
Setting
Payment and
Compounding
Periods
Setting the
Number of
Decimal Places
The examples on the following eight pages introduce you
quickly to the major features of the BA Real Estate
calculator. Try working the examples to find out how easy
it is to solve real estate calculations! Before starting,
however, perform the settings shown on this page to
ensure that the examples give the expected results.
The #
,
key sequence lets you alternate between
TM
beginning-of-period and end-of-period payments. For
example, a savings or lease situation may require
payments at the beginning of each payment period, while
most loans have payments at the end of each period. These
settings affect how interest is calculated.
When the calculator is set to beginning-of-period, the BGN
indicator is displayed. There is no indicator for the end-ofperiod setting.
Note: All of the examples in this section assume end-ofperiod payments.
To set the payment timing to end-of-period, press
# ,
until the BGN indicator is turned off.
(BGN/END is the second function of the 3 key.)
The # + key sequence lets you enter the number of
payments (P/Y) per year and the number of compounding
periods (C/Y) per year.
Most loans have an equal number of payment periods and
compounding periods per year. Other Time Value of
Money (TVM) situations, however, may have differing
periods. For example, a savings account may receive
regular monthly deposits (P/Y = 12), but have daily
compounding (C/Y = 365).
All of the examples in this section have 12 payment
periods and 12 compounding periods per year.
Before starting these examples, be sure that P/Y and C/Y
are set to 12. Press # + 12 j j. (P/Y is the second
function of the 1 key.)
All of the examples in this section (and, in general,
throughout the guidebook) are shown with the decimal set
to two places. To set two decimal places, press
# o
2.
Gettmg Started 5
Finding the Monthly Payment on a Loan
The TVM keys make it easy to enter at least three known
values in a TVM (Time Value of Money) problem and then
compute the unknown value. Suppose, for example, you
want to know the monthly payment required for a 30-year,
$130,000 mortgage loan at an annual percentage rate of
8%.
1. Clear any previous TVM values.
Press #
2. Enter the term of the loan
(30 years).
Press 30
3. Enter the 8% interest rate
(annual percentage rate).
Press 8 1.
4. Enter the $130,000 loan
amount.
Press 130 q
-
0
.
2
.
TRM= 30.00
I% = 8.00
.
LN = 130,000.00
0.00
5. Compute the payment
amount.
Press $ 3.
PMT= -953.89
Note: PMT is displayed as a negative number because it is a cash outflow
(an amount you pay).
6 Getting Started
Calculating Total Payment (PITI)
Monthly house payments often include not only principal
and interest (the payback on the loan), but also property
taxes and insurance. Using the data you entered in the
previous example, you can compute the total payment
including principal, interest, taxes, and insurance (PITI).
Assume that the local property-tax
rate is 1.5% annually and the annual
insurance rate is 0.5%. If the selling
price of the house is $153,000, what
will be the total monthly payment?
1. Enter the local property-tax rate.
Press 1.5 #
Z
.
TX%= 1.50
2. Enter the annual insurance rate.
Press .5 #
Q
.
IS% = 0.50
3. Enter the selling price.
Press 153 q
@
.
PRC= 153,000.00
4. Compute PITI.
Press $ &.
PITI= -1,208.89
Note: The P&I payment was calculated on the previous page. The property
tax rate (
Z
) and the insurance rate (
Q
) will remain in the calculator
until you change them or remove the batteries. Turning the calculator off
does not clear this information.
Gettmg Started 7
Amortization for the First Year
The Amortization model prompts you for the starting and
ending payment numbers to define a range of payment
periods. You can then use the TVM values you entered
earlier to find the loan balance after the last payment and
the total principal and interest paid in the range. Find the
balance, principal, and interest after 12 payments.
1. To start Amortization, press
%
.
2. Enter the number of the first
payment period (P1).
P1 = 1.00
Press 1 j to enter the value for
P1 and advance to P2.
3. Enter the number of the last
payment (P2), and compute
balance, principal, and interest.
Press 12 j to change P2 and
start the list of results. The loan
balance after P2 is displayed.
4. Advance to the amount of
principal paid in the first 12
payments.
Press j.
5. Advance to the amount of
interest paid in the first 12
payments.
Press j.
To leave Amortization, press !.
P2 = 1.00
P2 = 12.00
BAL= 128,914.07
PRN= -1,085.93
INT= -10,360.75
8 Getting Started
Finding a Pay-off Balance
If the property is sold after 3.5 years, what amount will be
required to pay off the loan? Use the Amortization model
to find the balance after 3.5 years of payments.
1. To start Amortization, press
%
.
2. Enter the number of the first
payment period (P1).
Press 1 j to enter the value for
P1 and advance to P2.
3. Calculate the number of
payments in 3½ years , enter as
P2, and compute balance,
principal, and interest.
Press 12 O 3.5 j to calculate
and enter P2 and start the list of
results. The loan balance after
P2 is displayed.
P1 = 1.00
P2 = 1.00
P2 = 42.00
4. Show the amount of principal
paid in 3½ years.
j
Press
5. Show the amount of interest
paid in 3½ years.
Press j.
To leave Amortization, press !.
BAL= 125,788.43
PRN= -4,211.57
INT= -35,851.81
Gettmg Started 9
Changing the Conditions of the Loan
You can change any of the TVM values and then compute
a new value. Using the values you entered on page 6,
find the monthly payment at 9% interest. Then find the
monthly payment at 9.5% for a 15-year loan.
1. Change the interest rate to
9%.
Press 9 1.
2. Compute the new payment
at the higher interest rate.
Press $ 3.
3. Change the interest rate to
9.5%.
Press 9.5 1.
I% = 9.00
PMT= -1,046.01
I% = 9.50
4. Change the term to 15
years.
Press 15
0
.
5. Compute the new payment
amount (15-year loan).
Press $ 3.
10 Getting Started
TRM= 15.00
PMT= -1,357.49
Estimating Appreciation
You are buying a $150,000 home that is expected to
appreciate for the next five years at 3% per year. Estimate
the value of the house at the end of five years.
1. Enter the current price of the
home (starting value).
Press 150 q # 7.
2. Enter the expected annual
appreciation rate.
Press 3 #
:
.
3. Enter the number of periods
(years).
Press 5 # 9.
4. Calculate the expected value at
the end of five years.
Press $ # 8.
V1 = 150,000.00
APP= 3.00
#PD= 5.00
V2 = 173,891.11
Gettmg Started 11
Qualifying a Buyer for a Loan
You have a buyer who has a total income of $6,200 per
month, with monthly debts of $580. Assuming a 20% down
payment at 7.5% annual interest for 30 years, a tax rate of
1.5%, an insurance rate of .5%, and an income/debt ratio
of 28/36, what is the maximum sales price this buyer can
consider?
1. Clear any previous TVM values.
Press #
2. Enter income percent.
-
.
0.00
Press 28 #
m
.
3. Enter debt percent.
Press 36 #
d
.
4. Enter the property-tax rate.
Press 1.5 #
Z
.
5. Enter the annual insurance rate.
Press .5 #
Q
.
6. Enter the term of the loan.
Press 30
0
.
7. Enter the interest rate.
Press 7.5 1.
8. Start the qualification.
?
Press
.
9. Enter monthly income amount.
Press 6200 j.
IN% = 28.00
DB%= 36.00
TX%= 1.50
IS% = 0.50
TRM= 30.00
I% = 7.50
INC=
INC= 6,200.00
12 Getting Started
DBT=
10. Enter monthly debt amount.
Press 580 j.
11. Enter down payment percent
and compute PITI.
Press 20 j.
12. Compute loan payment.
Press j.
13. Compute loan amount.
Press j.
14. Compute sales price.
Press j.
15. Compute down payment
amount.
Press j.
DBT= 580.00
DN%=
DN%= 20.00
PITI= -1,652.00
PMT= -1,272.77
QLA= 182,028.97
QPR= 227,536.21
DN$ = 45,507.24
The buyer should consider a maximum sales price of $227,536.21 and a
maximum loan of $182,028.97.
Note: The income rate
m
and the debt rate
d
will remain in the
calculator until you change them or remove the batteries. Turning the
calculator off does not clear this information.
Gettmg Started 13
A
A
A
Going Further
The BA Real Estate calculator contains built-in financial
formulas, or “models,” designed to solve common
financial and real estate calculations. The remaining
chapters in this book explain how to use the models. If
you need to review general calculator operation, refer to
the Appendix.
Permanent and
Temporary
Models
Activating a
Temporary
Model
Worksheets for
Real Estate Use
The calculator permanently stores some values you enter;
others are retained only while you are using a particular
model. INS %, TAX %, DEBT %, INC %, TAX&INS$, and the
TVM values are stored permanently until you clear them,
change them, or remove the batteries.
Values in the other models share temporary storage space.
To prevent conflicts, only one temporary model can be
active at a time.
Temporary Financial Model Keys
mortization
Buyer Qualification
Interest Conversion
nnual Percentage Rate
djustable Rate Mortgage
Percent Change/Appreciation
Bi-Weekly Mortgage Payments
%
>, ?
F, G, H
N
M
:, 7, 8, 9
L
Entering a value into a temporary model makes it the
active model. If the model was not already active, the
remaining values are set to their defaults.
•
The model remains active until you store a value in
another model or perform a TVM calculation.
•
While a model is active, you can store its values to
memory or to the TVM values.
•
Attempting to use ] or $ with an inactive model
causes an error.
A set of worksheets based on these models is enclosed to
use when working with clients. For most of the examples
in this book, a completed worksheet is included after the
keystroke solution to show how a worksheet can be used.
You may copy the worksheets for your personal use with
clients and customers. However, the worksheets may not
be reproduced in any other publication without the written
consent of Texas Instruments.
14 Getting Started
Chapter 1: Mortgages and Amortization
This chapter describes real estate models relating to
mortgages and amortization.
Chapter
Contents
The Time-Value-of-Money (TVM) Model ........................... 16
Changing TVM Settings ....................................................... 17
Setting Default Rates for Your Area .................................. 18
Calculating Down Payments............................................... 19
Computing a Monthly Mortgage Payment......................... 20
Finding the Unpaid Balance on a Mortgage...................... 22
Paying Off a Loan with Larger Payments.......................... 24
Calculating a Balloon Payment .......................................... 26
Finding the Payment for a Mortgage with a Balloon ....... 28
Total Payment Including Taxes and Insurance (PITI)..... 29
Computing Total Payment (PITI)....................................... 30
Adjustable-Rate Mortgage (ARM) ...................................... 32
Finding Periodic Payments for an ARM ............................ 33
Comparing an ARM to a Fixed-Rate Mortgage................. 36
Bi-Weekly Mortgage Payments........................................... 40
Calculating a Mortgage with Bi-Weekly Payments .......... 42
Finding the Balance on a Canadian Loan.......................... 44
Amortization (AMORT) ....................................................... 46
Finding the Principal and Interest Paid............................. 47
Mortgages and Amortization 15
0
The Time-Value-of-Money (TVM) Model
The TVM model lets you solve problems involving
regularly occurring, even payments, such as loans. When
you enter TVM values and settings, they are kept in
memory locations reserved specifically for them. Using
the other financial models does not affect these values
and settings.
Cash Inflows (+)
and Outflows (-)
Entering TVM
Values
The formulas for the TVM and Amortization models
distinguish between inflows (cash you receive) and
outflows (cash you pay out).
•
You must enter inflows (money you receive) as
positive values.
•
You must enter outflows (money you pay out) as
negative values.
•
The calculator displays computed inflows as positive
values and computed outflows as negative values.
Key Sequence Function
# -
Sets TVM values to zero and
displays zero. This key sequence
0, # *
does not affect the
settings.
C/Y
* Enters or computes the term of a
BGN/END, P/Y
loan in years (TERM), or the
number of payments (N) required to
repay the loan amount.
1
Enters or computes the annual
interest rate (I%).
2
Enters or computes the loan
amount.
3
Enters or computes the payment
amount (PMT).
4
Enters or computes the future value
(FV).
, or
Example: Set the term of a loan to 30 years.
30
* To avoid conflicting values for N and TERM, the
calculator automatically adjusts one when you enter or
compute the other. If you change the P/Y (payments per
year) setting after entering the term in years, N is
automatically adjusted to avoid a discrepancy.
16 Mortgages and Amortization
TRM= 30.00
#
Changing TVM Settings
You can vary settings that affect TVM and Amortization
calculations. These settings allow you to customize the
calculation for the specific loan or savings situation you
are evaluating. The calculator retains the settings until
you change them (or until batteries are replaced).
Selecting
Beginning- or
End-of-period
Payments
Setting P/Y and
C/Y
The #
,
key sequence lets you alternate between
beginning-of-period and end-of-period payments. For
example, a savings or lease situation may require
payments at the beginning of each payment period, while
most loans have payments at the end of each period. These
settings affect how interest is calculated.
When the calculator is set to beginning-of-period, the BGN
indicator is displayed. The factory setting is end-of-period
payments (no indicator).
The # + key sequence lets you enter the number of
payments (P/Y) per year and the number of compounding
periods (C/Y) per year.
The factory default setting is 12 for both P/Y and C/Y; that
is, 12 payment and compounding periods per year. Some
TVM calculations may require that you change these
settings. For example, a savings program may have
regular monthly deposits (P/Y = 12), but daily
compounding (C/Y = 365).
When you press
nn
where
is the current setting. You can press j to
+
, the display shows
P/Y = nn
,
accept the P/Y value, or enter or calculate a new value
(from 1 through 999) and press
.
j
The calculator temporarily displays the new P/Y setting,
copies the P/Y value into C/Y, and advances the display to
C/Y = nn
show
. You can then press j to accept the C/Y
value, or enter or calculate a new value (from 1 through
999) and press
. This sets C/Y, temporarily shows the
j
new C/Y value, and then exits.
Note: You can exit either prompt by pressing !. If you
want to exit after starting to enter a new value for P/Y or
C/Y, press ! twice.
Mortgages and Amortization 17
Setting Default Rates for Your Area
The calculator permanently stores the income/debt ratios
and local tax and insurance rates you enter. These
settings are used as defaults in your buyer-qualification
and PITI calculations.
Setting the
Qualifying
Ratios
Setting Tax
and Insurance
Rates
Be sure that you have entered the income/debt ratios
before calculating any buyer qualifications.
1. Enter the income percent used by lenders in your area
for the most commonly used mortgages. For example,
if the qualifying ratio is 28/36, enter 28 for the income
percent.
2. Press #
m
.
3. Enter the debt rate used by lenders in your area. For
example, if the qualifying ratio is 28/36, enter 36 for the
debt percent.
4. Press #
d
.
These settings are useful for finding the general range of
total PITI payments. Later, when you know the tax and
insurance amounts for a specific property, you can
override these settings.
1. Press ! to turn the calculator on.
2. Enter the property-tax rate as an annual rate. For
example, enter 1.5 for 1.5%.
3. Press #
Z
.
4. Enter the insurance rate as an annual rate. For
example, enter .5 for .5%.
5. Press #
Q
.
Entering an annual tax and insurance dollar amount with
the #
For example, if you enter
E
key sequence overrides these settings.
# E
1825
, the
calculator uses this value instead of the rates entered as
TAX% and INS%.
18 Mortgages and Amortization
Calculating Down Payments
Mortgage loans are usually stated as 80% loans, 90%
loans, etc. The down payment percentage is the
difference between the stated percentage and 100%. The
down payment percentage is applied to the sales price of
the property to find the down payment amount.
Calculating a
Down Payment
Amount
Calculating
Down Payment
When Sales
Price is Not
Known
If you know the sales price of a property and the down
payment percentage, you can easily compute how much
the down payment will be.
For example, suppose a client is buying a house for
$135,000 on an 80% loan. How much will the down
payment be?
Steps Keystrokes Display
Calculate the down
135 q X 80 A j 27,000.00
payment amount.
You may need to calculate a down payment when the
original sales price of the property is not known. If you
have the loan amount and percentage, you can calculate
the sales price and down payment amount.
Assume that a client borrowed $125,000 on an 85% loan
some years ago. What was the original sales price and
down payment amount?
Steps Keystrokes Display
Divide loan amount
125 q B 85 A j 147,058.82
by loan percent to
find sales price.
Calculate the down
O
15 A
j
22,058.82
payment amount.
Mortgages and Amortization 19
# -
#
0
2
3
0
3
Computing a Monthly Mortgage Payment
Find the monthly payment on a home priced at $130,000
if the buyer makes a 10% down payment and finances the
balance with a 30-year mortgage at 9.125% annual
interest. If you are preparing a report for a client, fill in
the worksheet as you calculate the results.
Solution
Press #
Steps Keystrokes Display
,
until the BGN indicator disappears.
Clear TVM values.
Set P/Y and C/Y to 12.
+ 12
P/Y = 12.00
j
C/Y = 12.00
j
Enter term in years.
Enter interest rate on
30
9.125
1
TRM= 30.00
I% = 9.13
the loan.
Enter price less down
payment.
Compute monthly
130 q X 10
j
$
A
LN = 117,000.00
PMT=-951.95
payment.
Find the monthly payment if the term of the loan is 15
years instead of 30.
Steps Keystrokes Display
Change term to 15
15
TRM= 15.00
years.
Compute payment.
$
PMT= -1,195.41
0.00
12.00
20 Mortgages and Amortization
Mortgage Payment—Principal and Interest
# -
j
2
0
$ 3
1. Clear TVM values (if not already cleared).
2. Enter sales price.
3. Subtract down payment.
4. Calculate and enter loan amount.
5. Enter term of loan (in years).
6. Enter interest rate.
7. Compute payment amount.
$130,000
X
10
A
$117,000
30
9.125
1
$.951.95
Mortgages and Amortization 21
# -
#
0
2
3
#
Finding the Unpaid Balance on a Mortgage
Consider a mortgage loan of $250,000 that is to terminate
in 25 years. At 8.5% annual interest rate, what will the
unpaid balance be in 15 years?
Solution
Press #
Steps Keystrokes Display
Clear TVM values.
Set P/Y and C/Y to 12.
Calculate original
mortgage payment.
Enter the number of
payments made in 15
,
until the BGN indicator disappears.
+ 12
P/Y = 12.00
j
C/Y = 12.00
j
25
8.5
1
250 q
$
15 O 12
*
j
TRM= 25.00
I% = 8.50
LN = 250,000.00
PMT=-2,013.07
N = 180.00
0.00
12.00
180.00
years.
Calculate unpaid
$
4
FV =-162,362.91
balance.
Note: You also can use the Amortization model to
calculate unpaid balance. The answer may be slightly
different, due to rounding differences between the two
methods.
22 Mortgages and Amortization
Calculating Unpaid Balance on an Existing Mortgage
# -
0
2
3
#
1. Clear TVM values (if not already cleared).
2. Enter original term of loan (in years).
3. Enter interest rate.
4. Enter original loan amount.
5. Compute payment.
6. Enter number of payments made.
7. Compute unpaid balance.
$
$ 4
25
8.5
$250,000
$.2,013.07
180
$.162,362.91
1
*
Mortgages and Amortization 23
# -
#
0
2
3
A
v
3
0
Paying Off a Loan with Larger Payments
A client has just borrowed $125,000 for 30 years at 7.75%.
If she is able to increase her payment amount by $100
per month, how quickly can she pay the note off?
Solution
Press #
Steps Keystrokes Display
Clear TVM values.
Set P/Y and C/Y to 12.
,
until the BGN indicator disappears.
0.00
+ 12
P/Y = 12.00
j
C/Y = 12.00
j
Enter term in years.
Enter interest rate.
Enter loan amount.
Compute payment.
dd extra payment
30
7.75
1
125 q
$
100
a
t
TRM= 30.00
I% = 7.75
LN = 125,000.00
PMT=-895.52
amount as a negative
alue.
Calculate and enter
j
PMT= -995.52
new payment amount.
Compute new term.
$
TRM= 21.56
Your client can pay off the loan in about 21.6 years.
12.00
-
100
24 Mortgages and Amortization
Paying Off a Loan Early by Making Larger Payments
# -
0
2
3
3
0
1. Clear TVM values (if not already cleared).
2. Enter term of loan (in years).
3. Enter interest rate.
4. Enter loan amount.
5. Compute monthly payment.
6. Add extra payment amount (as a negative
amount).
7. Calculate and enter new, larger payment.
8. Compute new term.
$
$
30
7.75
1
$125,000
j
$.895.52
a
$100
t
$.995.52
21.56
Mortgages and Amortization 25
# -
#
0
2
3
#
3
#
A
# n
Calculating a Balloon Payment
You are buying a $75,000 lake house. With a 10% down
payment, the interest rate will be 9.25% amortized over a
30-year period. However, the loan will be due and
payable at the end of 15 years. How much will the balloon
payment be at the end of 15 years?
Solution
Press #
Steps Keystrokes Display
Clear TVM values.
Set P/Y and C/Y to 12.
Enter TVM values;
compute and enter
loan amount.
Compute payment
and round the result.*
Enter number of
payments made in 15
,
until the BGN indicator disappears.
+ 12
P/Y = 12.00
j
C/Y = 12.00
j
30
9.25
1
75 q X 10
j
$
n
15 O 12
j
*
TRM= 30.00
I% = 9.25
7,500.00
A
LN = 67,500.00
PMT= -555.31
PMT= -555.31
180.00
N = 180.00
0.00
12.00
years.
Compute unpaid
$
4
FV = -53,953.92
balance.
dd monthly payment
] 3
a
j
-54,509.23
to find total balloon
payment.
Note: The balloon payment includes both the unpaid
balance and the final monthly payment. You could, of
course, estimate the balloon payment simply by
calculating the unpaid balance. The only difference
between the two results is the amount of the final monthly
payment.
* The calculator performs its internal computations to 13
digits. The balloon payment should be computed using the
actual amount paid in dollars and cents. Pressing
rounds the internal value to the displayed
value.
26 Mortgages and Amortization
Calculating a Balloon Payment to Retire a Mortgage
# -
0
2
$ 3
#
3
#
$ 4
a ] 3
j
1. Clear TVM values (if not already cleared).
2. Enter term of loan (in years).
3. Enter interest rate.
4. Enter loan amount.
5. Compute payment amount
and round the result.
6. Enter the number of payments made.
7. Compute unpaid balance.
8. Add payment computed in
line 5.
9. Calculate the balloon payment.
30
9.25
$67,500
$.555.31
180
$.53,953.92
$.555.31
$.54,509.23
1
n
*
Mortgages and Amortization 27
# -
0
2
3
# -
0
2
$ 3
Finding the Payment for a Mortgage with a Balloon
You are making a $70,000 loan at 8% over 30 years, with
a balloon payment of $20,000 due at the end of the loan.
How much will your monthly payment be?
Solution
Press #
Steps Keystrokes Display
,
until the BGN indicator disappears.
Clear TVM values.
Enter term in years.
Enter interest rate.
Enter loan amount.
Enter balloon amount
30
8
1
70 q
20 q t
TRM= 30.00
I% = 8.00
LN = 70,000.00
FV =-20,000.00
4
as a negative.
Compute payment.
$
PMT=-500.22
Calculating Monthly Payment for a Mortgage with a Balloon
Payment
1. Clear TVM values (if not already cleared).
2. Enter term of loan (in years).
3. Enter interest rate.
4. Enter loan amount.
30
8
$70,000
0.00
1
5. Enter amount of balloon payment, as a
6. Compute monthly payment.
28 Mortgages and Amortization
negative value.
$20,000
$.500.22
t 4
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