How to Calculate a Home Equity Loan Payment

There are two main types of home equity loans available. You can have a home equity line of credit or home equity loan. A line of credit will allow you to remove money as you choose, much like a credit card. The home equity loan is a lump sum, usually used for debt consolidation or a payoff of another mortgage. Both types have adjustable or fixed rates available.

Difficulty: Moderate

Instructions

Interest and Principal Payment Fixed Rate or Initial Rate

1. Find out what your interest rate is. If you're just entering a home equity loan, the bank tells you when before the papers are signed.

2. Determine the balance of the loan. If this is a new loan, check to make certain that the balance is the final balance, after any fees have been added in.

3. Locate a home equity loan calculator. You can find one online at Learning Tree or at Interest.Com.

4. Plug in the fixed payment option.

5. Insert the amount of money owed in the appropriate line.

6. Put in the interest rate.

7. Calculate the number of months. If your mortgage is written by the number of years, multiply that by 12. Hit the calculate button for the payment.

Interest Only Option

8. Input the amount of the loan into a home equity calculator.

9. Find your interest rate and put it into the calculator.

10. Put in the number of years for the loan.

11. Use the interest only option. Press calculate.

12. Try the old fashioned way. Multiply the amount that you are borrowing, including fees, times the interest rate. Divide that number by 12.

Adjustable Rate at Adjustment Time

13. Find the number of months left on your loan. If you have an adjustable rate mortgage and the rate changes, the payment will be determined by the number of months left. Put this number into the calculator.

14. Check on the present balance. Find the exact amount that you owe on your mortgage and input it into a mortgage calculator.

15. Put in the new rate. You need to know the new rate before you can calculate the payment. To get a ball park of what the payment could be, check to see how much the rate can increase and add the highest possible amount to your interest.

16. Plug in the fixed payment option and hit calculate.

Tips & Warnings

• When you're using the interest only method, check the number of years that you can pay interest only. Convert that to months and subtract that number from the total number of months. Use the calculator to find out what your payments will be when you have to pay interest and principal both. Put the interest rate in, amount owed, number of months left on the loan and fixed rate. Hit calculate.