Example 1 $500K 30 yr. mortgage at 4% [ fixed rate amortized ]

Monthly payments are $2,387.08

In this first example we will see what the annual percentage rate [ APR ]

is when a mortgagee sells their property after making payments for 8

years.

At year 8 amounts paid:

$229,159.68 Total Payments [ Pymts ]

$81,347.94 Applied to reduce Principal

$147,811.74 Paid in Interest [ Int ]

The percent interest paid [ %Int ] is just the Int divided by the Pymts

[ e.g. I loan you $100 you pay me $110 in 8 years or less is a 10% loan]

%Int = Int / Pymts x 100 = 64.50%

The APR is the percent of interest paid against the principal divided by 8

years.

APR = Int / Pymts / 8 x 100

APR = $147,811.74 / $229,159.68 / 8 x 100 = 8.06%