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Updated over 8 years ago on . Most recent reply

User Stats

114
Posts
18
Votes
Kathryn Bowden
  • Flipper/Rehabber
  • Tucson, AZ
18
Votes |
114
Posts

Help! Having heck of a time figuring out interest only loan

Kathryn Bowden
  • Flipper/Rehabber
  • Tucson, AZ
Posted

I am trying to figure out if I can afford a deal.  I have put these numbers through a few different calculators available on-line, but want to be sure I am figuring this correctly.  I have a private investor (my friend, not experienced) who would like to give me a loan for an eventual flip (we are holding it for one year first which has nothing to do with the flip itself, but a family matter), and we agreed that I would pay her interest only on her principal for that year.  After that year, we're going to convert it to a different kind of profit sharing deal for the flip.  But in that year, how would the interest only standardly be calculated.  I amortized it over 30 years with the interest rate we agreed upon, then chose one year as interest-only.  Does this make sense?  Does it work like a normally amortized loan, as in would I be paying more interest up front in that first year?  I can barely justify the payment the way I'm figuring it, and am hoping perhaps that isn't the way the math should be done.  I used a different calculator and it gave me a lower figure, but have no idea why.  If it helps, the principal balance will be $80,000 with an interest only rate of 6% for one year (or less, depending on the family matter).  I hope I am being clear in my question above.  Thanks for your help!

Most Popular Reply

User Stats

50
Posts
29
Votes
William Mccurdy
  • Fayetteville, NC
29
Votes |
50
Posts
William Mccurdy
  • Fayetteville, NC
Replied

(80,000x.06)/12=400 a month. That's the way it should be right?

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