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Flip it Fridays Weekly Tip - How to Calculate a Balloon Payment

well welcome back to the this flippant

Friday video series and the previous

video we did we talked about how to

determine a mortgage payment or what the

principal balance would be of a if you

know the monthly payment the number of

years and the interest rate how to

determine what the principal balance

would be or the mortgage balance or how

to if you're if you know the first three

how to determine what the monthly

payment would be and basically as long

as you know three of these four you can

figure out the fourth one if you don't

remember I'll cover them again principle

and Pai stands for principle and

interest or the mortgage payment the

number of payments the interest rate and

the present value or the mortgage

balance okay well there's another one

that's the FV the future value and what

would you need to know a future value

for well if you're gonna put a balloon

payment in the mortgage that would be

the future value or let's say three

years down the road they want to know

well what's the payoff what's the

current standing balance of the mortgage

well if they mean if this is the terms

and they made the payments on time every

single month then we can figure out the

future value by putting in these items

and then calculate a metal so for

example let's say let's say we want to

put in a five-year balloon so we ran

these numbers at the 30 30 years or the

360 okay so what we do is we would

change this to five years or 60 payments

okay so five years of 60 payments we

change the number so we've already got

these items calculated out now we change

that to five and then rather than

hitting present value so I'm going to

put in five years in this case so that's

gonna be 60 payments now rather than

trying to calculate for the present

value I'm gonna calculate based on all

of these and all this information in

there what the future value has been a

beat and it'll take a second for the

calculator to do it okay after five

years they still owe ninety one thousand

maybe we do this here ninety one

thousand eight hundred and twenty-eight

in 73 cents that's up with a five-year

balloon okay so five your balloon

payment after five years making five

hundred thirty six dollars a month's

times sixty payments they still own

ninety one thousand that means they only

paid little over eight thousand dollars

in interest it's in five years look

because that's where most of your

payment that's going to is that okay so

that is important because now we need to

calculate a balloon payment but let's

say five years on the road so what's the

balance of the mortgage whether it's for

a refinance or let's say you're getting

ready to sell this mortgage we'll talk

about how to discount it and calculate

the yield later on another video but

let's say you needed to sell the

mortgage and they want to know what's

the value you're going to be in five

years

okay this is how we get to that number

by putting on all of this using the 30

to come up with the monthly payment then

changing the month the number of

payments from three hundred sixty to

sixty and then calculating for the

future value so that's just hope you

understand that this is this is all part

of the whole time valuation of money

calculations and if you really start to

understand this how it always works you

can see where the real money is that

it's in the interest payments and that's

the whole time value of money when you

really understand it and start selling

properties or you know start buying and

selling it using seller financing or

private financing more creative stuff

where you're not going to the banks you

can see what the real wealth is and you

can see why there's so many mortgage

companies out there that really want to

be in the mortgage industry because of

the amount of money that they can make

because of the time value of money and

learn how to use a mortgage financial

calculator

with that we'll see you guys back at the

next week