Deal Analysis-Determining Mortgage Payment

[David King]

Hey everyone! I’m practicing deal analysis and I’m having trouble estimating what the monthly PI payment would be. I began by trying to do the math on my primary residence, but my calculated PI is ~$170 higher than my actual PI. So, let me show my work and hopefully somebody can point out where my calculations are wrong.

$175,000 PP

2.75% (30 yr./fixed)

$175,000x.0275=$4812.50 annual interest

$4812.50x30=$144,375 interest paid on loan

$175,000+$144,375=$319,375 total paid over 30 years

$319,375/30=$10,645.83 annual PI payment

$10,645.83/12=$887.15 monthly PI

What did I do wrong for my calculated PI to be almost $200 more than my actual PI?

Thanks!

[David King]

@Michael K Gallagher thanks Michael, that cleared it up for me! Your calculation was spot on. I am doing it this way solely for learning purposes right now so I can grasp the concept of what’s going on, but eventually I will transition to an easier route like you mentioned. Thanks again!