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Using a calculator can you show me step by step how I can calculate a monthly mortgage payment?

Using a calculator can you show me step by step how I can calculate a monthly mortgage payment.

For example the mortgage is $120K, the rate is 4.5% and the term is 360 months.

Further suppose I decide to pay off the mortgage at year 5, what would the amount owed be?

I have read the book and see the formula, I can calculate in excel as everyone else, but don't understand the formula nor how to calculate without the chart. So a detailed desciption would be very helpful.

Thank you.

Solution Preview

I assume you have a business calculator (if you don't skip down to the bottom). I have a Texas Instruments BA II Plus, I assume yours is similar.

First make sure you have set up your caculator, make sure you have set the number of payments per year to 12, look in the intructions for how to do that.

If you have it ready to go then follow these steps:

Press -120,000 then PV - mortgage value entered as a negative
Press 0 then FV - the value at the end of the mortgage is 0
Press 360 then N - the mortgage lasts for 360 months
Press 4.5 ...

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