Every Amortization schedule out there puts out a $4,622.33 monthly payment.
The lender is telling us that the payment is gonna be $4,660. We went as far as getting the amortization equation and manually plug in the numbers,
In any case their response is:
You are calculating payment using a 365 calculation.
=PMT(5.38%/12,360,-825000) = $4,622 payment (excel defaults to a 365 calculation)
=PMT(5.38%/12(365/360),360,-825000) = $4,660 payment (this is how we calculate payment)
From the amortization formula the underlined part of the equation should not be there, but they insist that's the payment and any online amortization schedule is incorrect
Ummm is this an open line of credit, similar to a HELOC, or something? Sometimes HELOCs use 360 day years. Sometimes title/escrow do too for property tax pro-rations, I've never really taken the time to find the patterns. Never seen it pop up on a closed end mortgage where you make 30 years of payments and you're done, with no ability to draw on them or other wonky features. But we do see the 360 day year pop up from time to time, 99% of people never notice, I guess you're the 1%.
My HP12-C says $1622.33 too.
Fun trivia, perhaps 100% true, perhaps only part true and part the stuff of legend and mystery of the days of yore. Let's travel in time back in the giant physical computer days. 360 days in a year and 360 mortgage payments (12 months times 30 years) meant they had to move less vacuum tubes around between calculations if you went with 360 day years. You could use most of the same program to calculate daily pro-rated interest, or a 30 year mortgage payment (the "program" was defined by what tube physically went where, less moving physical things around meant running more calculations faster). So institutions started pretending there were 360 days a year for some financial things. And if the payment ends up higher, the financial institutions didn't seem to mind.
The part that isn't legend: Somewhere along the lines we must assume that some lobbyist made it all right and legal, or we would not still see the 360 day year to this day. I am guessing that the way they are calculating is lawful, provided the disclosed APR is accurate and based on a normal year.
I used to work for a software company that had a loan servicing product. There are many ways to calculate interest. You’d be surprised. I know I was. At any rate, this is definitely legitimate and very common. If that’s how they calculate interest, that’s how they do it. Bottom line: take it or leave it. They aren’t going to change it. Hope this helps.