Understanding the Benefit of a Loan-to-Interest Table

A loan-to-interest table is a very useful finance resource for anyone about to buy real estate or working with real estate buyers because it concisely shows various monthly payment combinations based on a range of loan amounts and rates of interest. In just one sitting, you (or your customer) can quickly see hundreds of monthly payment amounts for various loan amounts with differing rates of interest.

For example, if the table is constructed with loan amounts ranging, say, from $230,000 to $470,000 and interest rates from 5.5% to 6.5%, you could just as easily see what the monthly mortgage payment is on a $350,000 loan at 5.75% as you could a $300,000 or $400,000 loan at 6.0% or 6.25%.

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Here's how it works.

A loan to interest table is a spreadsheet with columns and rows that intersect. The column headers show differing interest rates and the utter-most left column rows of differing loan amounts. The appropriate monthly payment is shown inside the cells where they intersect.

You can use Excel to make your own table and can include as many columns and rows as you wish depending on how many payment variations you want. The table created by my software program, for instance, includes a total of six columns and fifty rows with two hundred and forty five payment calculations.

Your next duty is to decide upon the range of interest rates and loan amounts you want included. To do this, you would want a form in your spreadsheet where you can make an entry to "step" the rate of interest and the loan amount. In the example above, for instance, I stepped the interest rates in increments of .250 and the loan amount in increments of $5,000. But I could have easily stepped the interest at .125 or 1.0 and the loan amount $100, $10,000, or more. The choice is yours.

Here's the benefit.

It's concise. With just two simple entries, you (or your customer) can quickly determine the monthly payment on a variety of loan amounts at differing interest rates without having to use a financial calculator to make each computation yourself.

It's a time-saver. A loan-to-interest table makes it possible for you (or your customer) to decide which combination of loan amounts and interest rates provide an acceptable (or desired) monthly loan payment instantly.

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