Calculate Monthly Mortgage Payment

Q: My mortgage is calculated daily, using 360 days a year. How do I calculate monthly, principle, and interest payments? I can use MS Excel to calculate monthly mortgage payment and the numbers agree with bank's numbers to cents. But this bank I do business with calculate mortgage daily and use 360 days a year. My numbers simply do not agree with theirs. Does anyone know the equation for calculating daily mortgage? For example, for a fifteen-year loan of $100,000 at an interest rate of 8.75%, using a monthly calculation, I get a monthly payment of $999.45 but the bank's number is $1007.9. Does anyone know how the bank calculates its payment?

A: Are you saying that MS Excel agrees with your bank? If so, what is the problem? The next sentence contradicts the sentence before it. How can MS Excel and your bank agree and yet your "...numbers simply do not agree with theirs?" A 15 year mortgage of $100,000 paid monthly at an interest of 8.75% requires a payment of $999.45. I get this from my program "Your Loan Partner", MS Excel, and my HP 12B calculator. Most banks will use a 360 day year for fractional month payments. This becomes evident if you close on a mortgage and have to pay a fractional month's interest to get to the first month in which a mortgage payment is due. You'll typically (but not always) discover that they would charge, 1/360*0.0875*number of days in interest charges to the first day of the following month. Now, as for the matter of why your mortgage payments are $1007.90 vs. $999.45, the question is whether or not you really borrowed an even $100,000. If you use my program "Your Loan Partner" (available at http://www.teleport.com/~flypig/index.html), you can calculate the principal associated with a monthly payment of $1007.90. It is $100,845.30. So, I'd look at my loan papers

and find out whether or not an extra 845.30 might have gotten added in at the front end of the loan. Did you finance "points" or loan fees? If none of these are the case, I'd talk to your bank. One interesting way to approach this is to look at a 15 year mortgage in which you made your payments daily. In 15 years, you would make 5400 daily payments (assuming a 360 day year). Using MS Excel, I find that this yields a daily payment of $33.26. If you multiply $33.26 x 360 and divide by 12, you get a payment of $997.80. If you multiply $33.26 x 365 and divide by 12 you get $1011.65. So, no matter how they do this, the numbers don't work out to what your bank is getting. .