Mortgage Constant | Propertylogy

Mortgage Constant

By on September 27, 2018

The mortgage constant is a factor that indicates how much mortgage payment will be made for every dollar borrowed.

For example, if the constant is 0.00584 for a $100,000 loan on a 30-year fixed rate, then the monthly mortgage payment would be:

0.00584 x $100,000 = $584

This is assuming the loan balance is the original principal amount.

While the above factor example is on a monthly basis, it is also possible for the factor to be on an annual basic.

Using the monthly payment, it is also possible to reverse the formula to calculate the mortgage constant.

For that the formula would be:

Debt service / Loan principal

This factor is generally used by academics and researchers ding studies on mortgage rate historical trends.

Otherwise, if the constant is provided by a lender, a borrower would be able to use it to quickly work out the monthly or annual payments.

Mortgage constant is also sometimes referred to as constant percent, debt service constant, or loan constant.



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