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Old 01-16-2018, 06:32 PM   #1
I Fall In
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Hard Money Interest Only

Can someone explain how the interest only works? How do you figure the amortization on a short term interest only loan?
Example; If you borrowed 100,000. on a 6 month interest only loan @ 10% what would your monthly payments be?
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Old 01-17-2018, 07:30 AM   #2
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!00,000 X !0% = 10,000 yearly interest.- (10% is the yearly interest right or is it 10% for 6 months?)
!0,000 divided by 12 = $833.34 Monthly if no fees or charges are thrown in.
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Old 01-17-2018, 07:43 AM   #3
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Loaners use compound interest formula. Watch out for this gimmick and you may end up paying more than lower interest rate for full 12 months.
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Old 01-17-2018, 09:06 AM   #4
goatchze
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With an interest only loan, there's not really any amortization as you are not paying down the principle.

To calculate the monthly payment, you simply multiply the loan amount by the annual rate, then divide by 12.
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Old 01-17-2018, 10:22 AM   #5
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Quote:
Originally Posted by goatchze View Post
With an interest only loan, there's not really any amortization as you are not paying down the principle.

To calculate the monthly payment, you simply multiply the loan amount by the annual rate, then divide by 12.
So using my example the monthly payments would be 833.33 ?
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Old 01-21-2018, 07:59 AM   #6
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Originally Posted by I Fall In View Post
So using my example the monthly payments would be 833.33 ?
Correct. I use hard money loans all the time. I flip houses so very familiar with them!
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