How to Calculate Principal & Interest Using a Rate Factor Sheet

When you repay a mortgage, you pay back both the principal you borrowed as well as interest that accrued on the loaned money. Instead of using a formula to find the monthly payment, you can figure the payment using a rate factor sheet, which tells you the cost per month to borrow $1,000 based on the interest rate and the mortgage term. When you know the monthly payment, you can figure the total amount of interest you will repay on the mortgage.

Locate the row for your interest rate in the interest rate column on the rate factor sheet. For example, if your interest rate equals 7.25 percent, find the row for 7.25 percent.

Find the column with the length of your mortgage. For example, if you have a 30-year mortgage, find the column for 30-year mortgages.

Find the rate factor for your mortgage by finding the cell where your interest rate row and term column intersect to find the rate factor. In this example, the rate factor equals 6.82.

Divide the amount you borrow for your mortgage by 1,000. For example, if you borrow $162,000, divide $162,000 by 1,000 to get $162.

Multiply the result by your rate factor to find the amount of your monthly mortgage cost. In this example, multiply 6.82 by $162 to find the monthly payment equals $1,104.84.

Multiply 12 by the number of years in your mortgage to find the number of monthly payments. In this example, multiply 30 by 12 to get 360 payments.

Multiply the number of monthly payments by the monthly payment amount to find the total amount of repayments. In this example, multiply $1,104.84 by 360 to get $397,742.40.

Subtract the original amount borrowed from the total amount paid to find the interest paid on the account. Finishing this example, subtract $162,000 of principal from $397,742.40 to find you paid $235,742.40 in interest.


About the Author

Based in the Kansas City area, Mike specializes in personal finance and business topics. He has been writing since 2009 and has been published by "Quicken," "TurboTax," and "The Motley Fool."