Here is a shot of an actual Truth-in-Lending statement for a real home mortgage (mine). I'm trying to check the numbers but they seem slightly off:

Truth-in-Lending statement image

It's a 30-year fixed rate mortgage. The annual percentage rate is 5.542%, and the total amount financed is $148,880.20.

I want to compute the monthly payment. I use the formula here: (https://en.wikipedia.org/wiki/Amortization_calculator)

A = (P i) / [1 - (1+i)^(-n)]

with i = .05542 / 12 and P = 148880.2 and n = 360.

My computation gives a monthly payment of 849.25, rather than 851.57 claimed on my document.

Am I reading something wrong with the document? I assume this isn't a simple calculation error from the mortgage company- what else could account for the discrepancy?

  • It's preferable to make questions as self-contained as possible. If you can include the relevant information from the TIL sheet, that would be better. You might get more answers. – user32479 Nov 10 '15 at 15:01
  • @Brick I did include the relevant information, didn't I? I also linked the TIL sheet just so people could see if I'm reading it wrong. – Chris Nov 10 '15 at 15:25
  • It would be better if the TIL image were directly in the question so that the question has stand-alone archival value. You probably can't post an image though since you're a new user, so maybe this is the best you can reasonably do. – user32479 Nov 10 '15 at 15:50
  • @Brick- exactly right. You're welcome to post the image into the question if you're allowed to. – Chris Nov 10 '15 at 16:57
  • Did your loan close on approximately July 13, 2005? If you did not pre-pay the first 18 days interest, then about $ 400 of extra interest got capitalized. ($ 412.55 using a 30 day month; $ 406.90 using a 365 day year; $ 406.62 using a 365.25 day year; $ 405.78 using a 366 day year.) The discrepancy you found corresponds to an initial value of $ 406.22. – Jasper Nov 10 '15 at 20:52

As your question is written now, it looks like you have a typo. Your stated APR is 5.542% = 0.05542, not 0.005542 as you've written. I ran the numbers that you gave (accounting for the typo) through the formula at Wikipedia and got $849.2528 / month, which will round to $849.25 for most payments. That doesn't match the number that you computed or the number on your TIL. (Maybe you also miskeyed the result of your calculation?)

I agree that it's unlikely that this is just a calculation error by the mortgage company, although I wouldn't completely rule it out. Are you paying anything else like a property tax escrow? I didn't pull a blank TIL form to see what might go into the monthly payment line that you showed, but in many cases you do pay more than just principle and interest each month. (Not sure if that gets reflected at that point on the form though.)

  • Thanks @Brick- You're right about my typos: I agree the formula gives 849.25. I fixed them in the question. I don't think the discrepancy is a tax escrow. There is property tax also, but that is added in separately (so my actual payment is in the mid $900s). Is it possible the numbers are tweaked to round the principal to the nearest penny on each line of the amortization schedule? This would make a small difference, but I don't think it would add up to a $2 monthly discrepancy. – Chris Nov 10 '15 at 17:01
  • @Chris Did this come with a Good Faith Estimate? I don't think that APR is necessarily the interest rate for the formula. See the example at the link and compare the APR on the first page to the "Rate" near the top-right corner of the second page. ftc.gov/sites/default/files/documents/reports/… – user32479 Nov 10 '15 at 17:23
  • Note that it's common to tweak the numbers to compromise between round-dollar payments and the requested term, eith a final small balloon payment to catch the difference. My current mortgage payment was rounded to $100, with a balloon of about $3000 at the end; when I run ALL the numbers they work out as expected but the monthly payment isn't enough. Also, I seem to recall that the closing cost is considered part of the cost of the loan and factored in. – keshlam Nov 10 '15 at 20:05

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