Example 2 $500K 30 yr. mortgage at 7% [ Today’s fixed rate ]

Monthly payments are $3,326.51

In this second 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:

$319,344.96 Total Payments [ Pymts ]

$52.541.39 Applied to reduce Principal

$266,803.57 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 = 83.55%

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

years.

APR = Int / Pymts / 8 x 100

APR = $266,803.57 / $319,344.96 / 8 x 100 = 10.44%