How to Calculate the Finance Charges on Home Equity
Finance charges are how much money a lender charges you to borrow money. The lender charges a percentage of the loan amount, called the interest rate, and adds it to the monthly payment amount. Because home equity loans can have lifespans of five to 30 years, finance charges can become significant. Knowing how to calculate the finance charges on a home equity loan will help you stay informed of exactly how much you have to pay back. All the information you need to calculate the finance charges on a home equity loan is located on the final settlement statement you received when you closed on the loan.
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Instructions
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Divide the interest rate percentage by 100 to convert it to a decimal.
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Multiply the loan amount by the number of years it will take you to repay the loan.
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Multiply this figure by the decimal-form interest to get the total finance charges of the home equity loan.
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