[marleyjeanne]

The person who bought a house from me on a 30 yr owner contract ( no restriction in contract for early pay off--) now is thinking he may want to pay it off after aprox 16 years. Actually he would like me to lower the interest rate which is at 9% or if I won't do that he said he will pay me off. I doubt Ill lower the rate but how do I figure out the amount due if paid off now? This guy also bought property from my father ( who was 87 yrs old at the time but sharp as a tack! ) and tried to get away with cutting almost $140,000.00 off the price but the courts caught him! So of course I don't trust him to tell me the amount due without checking myself! Ill also need to figure out how much I still owe to the seller I bought it from as I still have a few years left on my owner contract... help? Im no math whiz but if someone could explain the mathmatical method I sure would appreciate it! Thank You, Marley Jeanne

[joypulv]

'Amortization' calculators are online or in software like Excel or Open Office. You enter the price of the house, the number of payments (360, since he pays you monthly for 30 years, right?), and the interest rate, and you get a table. You look at the balance on the line representing the payment he wants to be the last - such as 16 x 12 = 192. That's the payoff amount.

If you want someone here to do it, give us the numbers.

You would be better off lowering his interest rate. You will be hard pressed to earn anymore than 3% in a safe investment. I'd consider 6%. Unless you need the cash now.

[joypulv]

Changed my mind, because interest rates of course will go up again within the next 14 years, so calculate the payoff and pay yours off too. Or write a new contract for an adjustable rate loan, maybe using a lawyer this time.

[ScottGem]

If you have Excel, there is an amortization template you can download. Amortization is how banks calculate how much of each payment goes to principal and how much goes to interest.

What you refer to as an "owner contract" sounds more like a mortgage. Does the contract specify a total amount to be paid or does it specify that the purchase price is x and payments will be made at 9% interest over 30 years at X amount per month?

If the contract does specify an interest rate, then its essentially a mortgage. Using an amortization calculator either with a spreadsheet program or online, will show the breakdown of principal and interest for each payment. It will them show the principal balance after each payment. That is the payoff balance. So you can tell the buyer, that the payoff balance effect x date is $x. You can tell him this amount rises daily as interest accrues.

This amount is NON negotiable, unless you want to give him a break to get your balance up front. But with interest rates so much lower now, he may be able to get a 15 year mortgage at under 5% which will be a lower payment then he's paying now.

[ebaines]

MJ: if you can tell us:

1. the original amount of the mortgage,
2. The date the mortagge went into effect,
3. The interest rate, and
4. How much per month he has been paying

Then we can calculate the payoff amount. Actually we don't need item 4, but it would be good to verify that the amount he has been paying corresponds to the amount he borrowed and interest rate.

[marleyjeanne]

1.$53,250.00 2.June ,1999 3.9% 4. $428.46

[ScottGem]

Assuming the loan originated 6/1/99 as of 12/1 the prinicpal balance would have been $45,321.08

By the way the Payment is correct for a 30 yr mortgage at 9%. However, its not 16 years if it originated in 1999.

[ebaines]

I agree with ScottGem. All I would add is that if he has made the payment that was due December 1, 2011 then his current pay-off amount is $45,232.53.

I am attaching an excel spreadsheet that shows how the principal declines with each payment. Go down to line 150 and across to column I ("Ending Balance") to see the current balance.