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Section 12: Real Estate and Lending 125
File name: hp 12c_user's guide_English_HDPMBF12E44 Page: 125 of 209
Printered Date: 2005/7/29 Dimension: 14.8 cm x 21 cm
Example 1:
A borrower is charged 2 points for the issuance of his mortgage. If
the mortgage amount is $60,000 for 30 years and the interest rate is 11
1
/
2
% per
year, with monthly payments, what true annual percentage rate is the borrower
paying
?
(One point is equal to 1% of the mortgage amount.)
Keystrokes Display
gÂ
fCLEARG
30gA
360.00
Months (into
n
)
11.5gC
0.96
Percent monthly interest rate (into
i
).
60000$
60,000.00
Loan amount (into PV).
P
–594.17
Monthly payment (calculated).
:$2b-$
58,800.00
Actual amount received by borrower
(into PV).
¼
0.98
Percent monthly interest rate
(calculated).
12§
11.76
Annual percentage rate.
Example 2:
Using the same information as given in example 1, calculate the
APR if the mortgage fee is $150 instead of a percentage.
Keystrokes Display
gÂ
fCLEARG
30gA
360.00
Months (into
n
)
11.5gC
0.96
Percent monthly interest rate (into
i
).
60000$
60,000.00
Loan amount (into PV).
P
–594.17
Monthly payment (calculated).
:$150-$
59,850.00
Effective mortgage amount (into PV).
¼
0.96
Monthly interest rate (calculated).
12§
11.53
Annual percentage rate.