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Posted by Just me on August 29, 2007, 9:24 pm
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Does Quicken 2006 have the ability to amortize a fixed-rate interest
only mortgage? Thanks!
George
gearlnospamno@nospamcomcast.net
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Posted by R. C. White on August 29, 2007, 11:57 pm
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Hi, George.
??
An interest-only loan does not amortize! After 10 years of interest-only
payments, the balance will still be the same as today.
Or did I misunderstand what you said?
RC
--
R. C. White, CPA
San Marcos, TX
(Retired. No longer licensed to practice public accounting.)
rc@grandecom.net
Microsoft Windows MVP
(Currently running Vista Ultimate x64)
> Does Quicken 2006 have the ability to amortize a fixed-rate interest
> only mortgage? Thanks!
>
>
> George
> gearlnospamno@nospamcomcast.net
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Posted by Andrew DeFaria on August 30, 2007, 1:31 am
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R. C. White wrote:
> Hi, George.
>
> ??
>
> An interest-only loan does not amortize! After 10 years of
> interest-only payments, the balance will still be the same as today.
>
> Or did I misunderstand what you said?
>
> RC
If you didn't misunderstand then is it any wonder what is causing the
current sub prime and credit problems/worries in the market today?
People clueless about finances!
--
Andrew DeFaria <http://defaria.com>
Nebraska: At least the cows are sane.
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R. C. White wrote:
George.
<br>
<br>
??
<br>
<br>
An interest-only loan does not amortize! After 10 years of
interest-only payments, the balance will still be the same as today.
<br>
<br>
Or did I misunderstand what you said?
<br>
<br>
RC
<br>
</blockquote>
If you didn't misunderstand then is it any wonder what is causing the
current sub prime and credit problems/worries in the market today?
People clueless about finances!<br>
<div class="moz-signature">-- <br>
<a href="http://defaria.com">Andrew DeFaria</a><br>
<small><font color="#999999">Nebraska: At least the cows are sane.</font></small>
</div>
</body>
</html>
--------------020900000405090406000007--
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Posted by Just me on September 2, 2007, 5:34 pm
Please log in for more thread options wrote:
>Hi, George.
>
>??
>
>An interest-only loan does not amortize! After 10 years of interest-only
>payments, the balance will still be the same as today.
>
>Or did I misunderstand what you said?
>
>RC
You understood correctly. But at the end of the 10 years wouldn't you
then have 20 years of principal to amortize (assuming a 30-year fixed
rate loan) with 10 years of interest already paid? I think this is the
amortization my friend wants . . .
Thanks!
George
gearlnospamno@nospamcomcast.net
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Posted by R. C. White on September 2, 2007, 9:14 pm
Please log in for more thread options Hi, George.
I don't think you've really thought this thing through. You are still
"thinking INSIDE the box". ;^}
If you have a 30-year loan for $100,000 at 6%, the interest for the first
month is .5%, or $500. If your monthly payment is $600, then your first
payment pays $500 interest and $100, reducing your balance to $99,900. Your
next month's interest is .5% x $99,900, or $499.50, letting $100.50 apply to
your principal, bringing your balance down to $99,799.50. Each month, of
course, interest will be slightly less, letting slightly more go to amortize
the loan. "Amortize" is related to words like "mortal" and it means to
slowly "kill" the loan, which the principal portion of each payment does.
But if that is an interest-only loan, then EVERY month's interest will be
$500, the monthly payment will be only $500, and nothing will be paid to
"amortize" the principal. After one month, after one year, and after 10
years, the loan balance will still be $100,000.
What happens after 10 years of interest-only payments depends on the terms
of that specific loan. Maybe the whole $100,000 will be due as a single
"balloon" payment. Or maybe principal payments will begin to be made
monthly - and that particular loan MAY require that the $100,000 be
amortized over 20 years, starting after 10 years, so that the loan will be
fully amortized after 30 years. We would have to actually READ the terms of
the loan - as your friend should have done before signing it - to know what
is required after 10 years.
Without having actually tried it, my guess is that Quicken can handle a
20-year amortization starting 10 years in the future if you carefully enter
the appropriate present and future dates. If you post the actual terms of
the loan, we can probably help you enter them into Quicken. (Well, I
probably can't, but John Pollard or some of the others who have used
Quicken's loan wizard probably can.)
Such loan terms are not unheard-of, but they don't fit the typical pattern.
Of course, in today's climate, who knows what is typical anymore?
RC
--
R. C. White, CPA
San Marcos, TX
(Retired. No longer licensed to practice public accounting.)
rc@grandecom.net
Microsoft Windows MVP
(Currently running Vista Ultimate x64)
> wrote:
>
>>Hi, George.
>>
>>??
>>
>>An interest-only loan does not amortize! After 10 years of interest-only
>>payments, the balance will still be the same as today.
>>
>>Or did I misunderstand what you said?
>>
>>RC
>
> You understood correctly. But at the end of the 10 years wouldn't you
> then have 20 years of principal to amortize (assuming a 30-year fixed
> rate loan) with 10 years of interest already paid? I think this is the
> amortization my friend wants . . .
>
> Thanks!
>
>
> George
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