BA Real Estate

WORKSHEETS
These worksheets are provided as a convenience only. The user is responsible for accuracy and for compliance with any applicable laws and regulations regarding notices and disclaimers that may be required on such forms or any other applicable laws and regulations.
1058168-0101 Copyright 1993, 1996 by Texas Instruments Incorporated. BA Real Estate Worksheets

Table of Contents

Mortgage PaymentPrincipal and Interest.... 3 Calculating Unpaid Balance on an Existing Mortgage... 4 Paying Off a Loan Early by Making Larger Payments.... 5 Calculating a Balloon Payment to Retire a Mortgage.... 6 Calculating Monthly Payment for a Mortgage with a Balloon Payment... 7 Time Required to Reduce a Loan to a Specific Amount... 8 PITIPrincipal, Interest, Tax, and Insurance Based on Annual Tax and Insurance Amounts. 9 PITIPrincipal, Interest, Tax, and Insurance Based on Tax and Insurance Percents. 10 Bi-Weekly Mortgage Payments.... 11 Adjustable Rate Mortgage..... 12 Adjustable Rate Mortgage vs. Fixed-Rate Mortgage.... 13 Adjustable Rate Mortgage vs. Fixed-Rate Mortgage (Continued).. 14 Payment and Remaining Balance on a Canadian Mortgage.... 15 Amortization Schedule..... 16 Amortization for a Specific Range of Payments.... 17 Finding Qualifying Loan Amount Based on Tax, Insurance, and Down Payment Percents.. 18 Finding Qualifying Loan Amount Based on Tax and Insurance Percents and Down Payment Amount. 19 Finding Qualifying Loan Amount Based on Tax and Insurance Amounts and Down Payment Percent. 20 Finding Qualifying Loan Amount Based on Tax, Insurance, and Down Payment Amounts.. 21 Finding Qualifying Income Based on Tax, Insurance, and Down Payment Percents.. 22 Finding Qualifying Income Based on Tax and Insurance Percents and Down Payment Amount. 23 Finding Qualifying Income Based on Tax and Insurance Amounts and Down Payment Percent. 24 Finding Qualifying Income Based on Tax, Insurance, and Down Payment Amounts.. 25 Finding Maximum Allowable Debt..... 26 Net Cost of Housing Based on Tax and Insurance Percents... 27 Savings Account with One Deposit.... 28 Savings Account with Regular Deposits.... 29 Appreciation..... 30 Total Percent Change/Appreciation Rate.... 30 Per-Period Percent Change/Appreciation Rate... 30 Estimate of Appreciated Value.... 30 Interest Conversion..... 31 From Effective to Nominal..... 31 From Nominal to Effective..... 31 Annual Percentage Rate Considering Points and Fees... 32 Monthly Payment and APR of a Refinanced Loan... 33 Finding the Purchase Price of a Note to Meet a Required Yield... 34 Yield of a Discounted Mortgage..... 35
Copyright 1993, 1996 by Texas Instruments Incorporated.
BA Real Estate Worksheets
Mortgage PaymentPrincipal and Interest

1. 2. 3. 4.

Clear TVM values (if not already cleared). Enter sales price. Subtract down payment. Calculate and enter loan amount.

5. 6. 7.

Enter term of loan (in years). Enter interest rate. Compute payment amount. $3
Prepared for ________________________________ By _________________________ Date ____________

BA Real Estate Worksheet

Texas Instruments grants permission to reproduce this page for limited office use with clients. All other rights reserved.

Calculating Unpaid Balance on an Existing Mortgage

1. 2. 3. 4. 5.

Clear TVM values (if not already cleared). Enter original term of loan (in years). Enter interest rate. Enter original loan amount. Compute payment.
Enter number of payments made. Compute unpaid balance. $4
Note: You also can use the Amortization key to calculate unpaid balance. The answer may be slightly different, due to rounding differences between the two methods.
Paying Off a Loan Early by Making Larger Payments
Clear TVM values (if not already cleared). Enter term of loan (in years). Enter interest rate. Enter loan amount. Compute monthly payment.
Add extra payment amount (as a negative amount). Calculate and enter new, larger payment.

Compute new term. $0

Calculating a Balloon Payment to Retire a Mortgage
Clear TVM values (if not already cleared). Enter term of loan (in years). Enter interest rate. Enter loan amount. Compute payment amount and round the result. Enter the number of payments made. Compute unpaid balance.

#2 $3 #n3 #* $4

Add payment computed in line 5.* a]3
Calculate the balloon payment. j
* The balloon payment includes both the unpaid balance (step 7) and the final monthly payment.

Comment:

Another school of thought is to omit steps 8 and 9 and simply calculate an unpaid balance as the balloon payment. The only difference between the two results is the amount of the final monthly payment.
Calculating Monthly Payment for a Mortgage with a Balloon Payment
Clear TVM values (if not already cleared). Enter term of loan (in years). Enter interest rate. Enter loan amount. Enter amount of balloon payment, as a negative value. Compute monthly payment.
Time Required to Reduce a Loan to a Specific Amount
Enter amount (as a negative value) that the principal will be reduced to. Compute the number of years required to reduce the principal, or see step 7b. Compute the number of payments required to reduce the principal.

years # of payments

PITIPrincipal, Interest, Tax, and Insurance Based on Annual Tax and Insurance Amounts

1. 2. 3. 4. 5. 6. 7. 8.

Clear TVM values (if not already cleared). Enter annual tax amount. Add annual insurance amount. Calculate and enter total tax and insurance.* Enter term of loan (in years). Enter interest rate. Enter loan amount. Compute payment (principal and interest).

a j #E 2 $3

Compute PITI. $&
* The calculator uses the TAX&INS$ amount, ignoring the TAX% and INS% settings. TAX% and INS% are used only when

TAX&INS$ is zero.

PITIPrincipal, Interest, Tax, and Insurance Based on Tax and Insurance Percents

Clear TVM values (if not already cleared). Enter local property-tax rate (if not already entered). Enter local insurance rate (if not already entered). Enter price.* Enter term of loan (in years). Enter interest rate. Enter loan amount. Compute payment (principal and interest).

##Z #Q @ 2 $3

4. 5. 6. 7. 8.
* You can omit this step. If you do, however, the tax and insurance amounts will be computed as percentages of the loan
amount, rather than the sales price of the property. This could result in underestimating PITI.
Bi-Weekly Mortgage Payments
Clear TVM values (if not already cleared). Enter term of loan (in years). Enter interest rate. Enter loan amount. Start Bi-Weekly and view the bi-weekly payment amount. View the number of bi-weekly payments (N) required to pay off loan. View the number of years (YRS) required.
j 8. View the interest saved at the end of the term by making bi-weekly payments instead of monthly payments.

Adjustable Rate Mortgage

1. 2. Clear TVM values (if not already cleared). Set number of payments per year and number of compounding periods per year (if not already set). Enter term of loan (in years). Enter interest rate. Enter loan amount. Start ARM. Accept the number of the initial payment (P1). Enter the number of the ending payment (P2) for the first adjustment period. Accept the initial interest rate. View monthly payment amount for this adjustment period. View balance at end of this adjustment period. Return to P1 and accept updated P1 as beginning payment of second adjustment period. Accept the updated P2, or enter the number of the ending payment of the second adjustment period. Enter the interest rate for this period. View payment amount for this adjustment period. View balance at end of this adjustment period. Return to P1 and accept updated P1 as the number of the beginning payment of the new adjustment period. Accept updated P2 as the number of the ending payment of the new adjustment period. Enter the interest rate for this period. View payment amount for this adjustment period. View balance at end of this adjustment period. j j j j j j j j j j j M j j j ##+ _____________ _____________ 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. j j 2
Repeat steps 17 through 21 until the maximum interest rate has been reached.
Adjustable Rate Mortgage vs. Fixed-Rate Mortgage
1. Use the Adjustable Rate Mortgage worksheet to calculate the payments for each adjustment period of the ARM and record those values in steps 4, 9, 15, and 21 respectively. Use the Mortgage PaymentPrincipal and Interest worksheet to calculate the payment for the fixed-rate mortgage and record that value in steps 3, 8, 14, and 20. Enter amount of fixed-rate payment. Subtract amount of initial ARM payment. View monthly savings/costs with ARM payment. Multiply monthly savings/costs by the number of months in the initial ARM period. Record total savings/costs during this period. Enter amount of fixed-rate payment. Subtract amount of ARM payment for second period. View monthly savings/costs during second period. Multiply monthly savings/costs by number of months in this adjustment period. Add to recorded savings/costs from step 7. Record accumulated savings/costs. Enter amount of fixed-rate payment. Subtract amount of ARM payment for third period. View monthly savings/costs during third period. Multiply monthly savings/costs by number of months in this adjustment period. Add to recorded savings/costs from step 13. Record accumulated savings/costs. ]3 X j O ___ j a]g jTg ]3 X j O ___ j a]g jTg (continued on back) t t X j O ___ j Tg t

3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19.
Adjustable Rate Mortgage vs. Fixed-Rate Mortgage (Continued)

20. 21. 22. 23. 24. 25.

Enter amount of fixed-rate payment. Subtract amount of ARM payment for fourth period. View monthly savings/costs during fourth period. Multiply monthly savings/costs by number of months in this adjustment period. Add to recorded savings/costs from step 19. Record accumulated savings/costs.

]3 X j O ___ j a]g jTg

Continue the comparison until the accumulated savings in the last column are reduced to or below zero. That is the breakeven point in the comparison. Once it is apparent that the savings will be exhausted in a given year, divide the monthly costs into the previous years total savings. This will tell you how many months will occur during that period before the savings are exhausted.
Payment and Remaining Balance on a Canadian Mortgage

1. 2. 3. 4. 5. 6. 7.

Clear TVM values (if not already cleared). Enter number of payment periods per year. Set compounding periods to semi-annual. Enter term of loan (in years). Enter interest rate. Enter loan amount. Compute payment amount.

##+ 2 j j 2 $3

Enter number of payments made, and store as N. Compute balance at end of period.

__ O __ j

$4 Note: If you do not normally solve Canadian mortgage problems, be sure to restore the compounding periods per year to 12.

Amortization Schedule

1. 2. 3. 4. 5. 6. 7. Clear TVM values (if not already cleared). Enter term of loan (in years). Enter interest rate. Enter loan amount. Compute payment (principal and interest). Start Amortization. Accept initial payment period (P1), or enter the number of the beginning payment period. Accept ending payment period (P2), or enter the number of the ending payment period. View balance remaining after P2. View principal paid from P1 through P2. View interest paid from P1 through P2. Return to P1 and accept updated P1 as next beginning payment period. Accept updated P2, or enter the number of the next ending payment period. View balance remaining after P2. View principal paid from P1 through P2. View interest paid from P1 through P2. Return to P1 and accept updated P1 as next beginning payment period. Accept updated P2 as the next ending payment period. View balance remaining after P2. View principal paid from P1 through P2. View interest paid from P1 through P2. j j j j j j j j j j j j $3 % j j #2

9. 10. 11. 12.

14. 15. 16. 17.

18. 19. 20. 21.

Repeat steps 17 through 21 as necessary.
Amortization for a Specific Range of Payments
Clear TVM values (if not already cleared). Enter term of loan (in years). Enter interest rate. Enter loan amount. Compute payment (principal and interest).
Start Amortization. Enter the number of the beginning payment period (P1). Enter the number of the ending payment period (P2). View balance remaining after payment P2.
View principal paid from P1 through P2. j
View interest paid from P1 through P2. j
Finding Qualifying Loan Amount Based on
Tax, Insurance, and Down Payment Percents
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12.
Clear TVM values (if not already cleared). Enter income percent (if not already entered). Enter debt percent (if not already entered). Enter tax percent (if not already entered). Enter insurance percent (if not already entered). Enter term of loan (in years). Enter interest rate. Start the qualification. Enter gross monthly income amount (total). Enter monthly debt amount (total). Enter down payment percent (0 to 99). Compute PITI.

##m #d #Z #Q ? j j

j 13. Compute payment. j 14. Compute qualifying loan amount. j 15. Compute qualifying sales price. j 16. Compute down payment amount. j
Finding Qualifying Loan Amount Based on Tax and Insurance Percents and Down Payment Amount
Clear TVM values (if not already cleared). Enter income percent (if not already entered). Enter debt percent (if not already entered). Enter tax percent (if not already entered). Enter insurance percent (if not already entered). Enter term of loan (in years). Enter interest rate. Start the qualification. Enter monthly income amount (total). Enter monthly debt amount (total). Enter down payment amount (in dollars).* Compute PITI.
j 13. Compute payment. j 14. Compute qualifying loan amount. j 15. Compute qualifying sales price. j 16. Compute down payment amount. j * The calculator accepts any number greater than 99 as a down payment dollar amount.
Finding Qualifying Loan Amount Based on Tax and Insurance Amounts and Down Payment Percent
Clear TVM values (if not already cleared). Enter income percent (if not already entered). Enter debt percent (if not already entered). Enter annual tax amount. Add annual insurance amount and enter total.* Enter term of loan (in years). Enter interest rate. Start the qualification. Enter monthly income amount (total). Enter monthly debt amount (total). Enter down payment percent (0 to 99). Compute PITI.

##m #d

j#E 0 1
j 13. Compute payment. j 14. Compute qualifying loan amount. j 15. Compute qualifying sales price. j 16. Compute down payment amount. j * The calculator uses the TAX&INS$ amount, ignoring the TAX% and INS% settings. TAX% and INS% are used only when
Finding Qualifying Loan Amount Based on Tax, Insurance, and Down Payment Amounts
Clear TVM values (if not already cleared). Enter income percent (if not already entered). Enter debt percent (if not already entered). Enter annual tax amount. Add annual insurance amount, and enter total.* Enter term of loan (in years). Enter interest rate. Start the qualification. Enter monthly income amount (total). Enter monthly debt amount (total). Enter down payment amount (in dollars).** Compute PITI.

#______________ #m #d

** The calculator accepts any number greater than 99 as a down payment dollar amount.
Finding Qualifying Income Based on Tax, Insurance, and Down Payment Percents
Clear TVM values (if not already cleared). Enter income percent (if not already entered). Enter debt percent (if not already entered). Enter tax percent (if not already entered). Enter insurance percent (if not already entered). Enter term of loan (in years). Enter interest rate. Start the qualification. Enter price. Enter down payment percent (0 to 99). Enter monthly debt amount (total). Compute qualifying loan amount.

##m #d #Z #Q > j j

j 13. Compute payment. j 14. Compute PITI. j 15. Compute qualifying income. j
Finding Qualifying Income Based on Tax and Insurance Percents and Down Payment Amount
Clear TVM values (if not already cleared). Enter income percent (if not already entered). Enter debt percent (if not already entered). Enter tax percent (if not already entered). Enter insurance percent (if not already entered). Enter term of loan (in years). Enter interest rate. Start the qualification. Enter price. Enter down payment amount (in dollars).* Enter monthly debt amount (total). Compute qualifying loan amount.

* The calculator accepts any number greater than 99 as a down payment dollar amount.
Finding Qualifying Income Based on Tax and Insurance Amounts and Down Payment Percent
Clear TVM values (if not already cleared). Enter income percent (if not already entered). Enter debt percent (if not already entered). Enter annual tax amount. Add annual insurance amount, and enter total.* Enter term of loan (in years). Enter interest rate. Start the qualification. Enter price. Enter down payment percent (0 to 99). Enter monthly debt amount (total). Compute qualifying loan amount.

> j j

* The calculator uses the TAX&INS$ amount, ignoring the TAX% and INS% settings. TAX% and INS% are used only when TAX&INS$ is zero.
Finding Qualifying Income Based on Tax, Insurance, and Down Payment Amounts
Clear TVM values (if not already cleared). Enter income percent (if not already entered). Enter debt percent (if not already entered). Enter annual tax amount. Add annual insurance amount, and enter total.* Enter term of loan (in years). Enter interest rate. Start the qualification. Enter price. Enter down payment amount (in dollars).** Enter monthly debt amount (total). Compute qualifying loan amount.

6. 7. 8. 9. 10. 11. 12.

j 13. Compute payment. j 14. Compute PITI. j 15. Compute qualifying income. j * The calculator uses the TAX&INS$ amount, ignoring the TAX% and INS% settings. TAX% and INS% are used only when
Finding Maximum Allowable Debt
Enter income percent (if not already entered). Enter debt percent (if not already entered). Enter tax percent (if not already entered). Enter insurance percent (if not already entered). Enter term of loan (in years). Enter interest rate. Start the qualification. Enter price. Enter down payment percent (0 to 99). Enter a zero for monthly debt amount (total). Compute qualifying loan amount. j >

#m #d #Z #Q 0 1

5. 6. 7. 8. 9. 10. 11.

Compute payment. j

Compute PITI and store it. j Tg
Compute qualifying income. j
Multiply by debt ratio. O]#dAj
Calculate maximum debt. a]gj
Net Cost of Housing Based on Tax and Insurance Percents
1. 2. 3. 4. 5. 6. 7. 8. 9. 10.
Clear TVM values (if not already cleared). Enter sales price. Enter tax percent (if not already entered). Enter insurance percent (if not already entered). Enter term of loan (in years). Enter interest rate. Enter loan amount. Compute payment. Recall loan amount. Multiply by annual interest rate (as a percentage) to find approximate annual interest. Add annual tax amount.

#@ #Z #Q 2 $3 ]2 O]1Aj Tg

11. 12. 13. 14. 15.

] @ O ]# Z A j a]gj O j B 12 j Tg A
Calculate total tax-deductible items. Multiply by homeowners income-tax rate. Calculate annual tax savings.* Divide by 12 to find monthly tax savings, and store the result in memory. Compute PITI. Subtract monthly tax savings. Calculate monthly net cost of housing.

16. 17. 18.

$& X]gt j
* Assumes the homeowner is not using the standard deduction.
Savings Account with One Deposit
Clear TVM values (if not already cleared). Enter number of compounding periods per year. Enter term of account (in years). Enter interest rate of account. Enter initial deposit (as a negative amount) in account. Compute value of account at maturity.

##+ jj t2

3. 4. 5.
Savings Account with Regular Deposits
Clear TVM values (if not already cleared). Set beginning-of-period calculations.*
## , (as necessary to display BGN) #+ j j t2 t3
Enter number of deposit periods per year. Enter number of compounding periods per year. Enter term of account. Enter interest rate of account. Enter initial deposit, if any, (as a negative amount) in account. Enter the amount deposited each period as a negative amount. Compute value of account at maturity.
* Most savings accounts will be calculated with beginning-of-period payments. The calculator remains set to BGN or END until you change the setting.
Appreciation Total Percent Change/Appreciation Rate
1. 2. 3. 4. Enter starting value or price. Enter ending value or price. Enter number of periods as 1. Compute appreciation rate. $#: 1 #7 #8 #9
Per-Period Percent Change/Appreciation Rate
1. 2. 3. Enter starting value or price. Enter ending value or price. Enter total number of periods over which appreciation has occurred. (For annual appreciation, enter the number of years.) Compute appreciation rate per period $#: #7 #8 #9
Estimate of Appreciated Value
1. 2. Enter starting value or price. Enter total number of periods over which appreciation will occur. Enter expected appreciation rate per period. Compute expected ending value or price. $#8 #7 #9 #:
Interest Conversion From Effective to Nominal
Enter effective rate. Enter number of compounding periods per year. Compute nominal rate. $#F
From Nominal to Effective
Enter nominal rate. Enter number of compounding periods per year. Compute effective rate. $#G
Annual Percentage Rate Considering Points and Fees
Clear TVM values (if not already cleared). Enter term of loan (in years). Enter loan amount. Start APR. Enter interest rate. Enter number of points. Enter total fees. View actual annual percentage rate.

#N j j

2. 3. 4. 5. 6. 7. 8.
j To calculate another APR using the same loan amount and term, press j after step 8. The calculator returns to step 5.
Monthly Payment and APR of a Refinanced Loan

Clear TVM values (if not already cleared). Enter original term of loan (in years). Enter interest rate. Enter face value of mortgage loan. Compute payment amount. Enter number of payment years. Compute balance of original loan, and store as amount of refinanced loan. Set FV to zero. Enter term of refinanced loan. Enter new interest rate. Compute new monthly payment. Start APR. Enter number of points. Enter total fees. View actual annual percentage rate.

#2 $$4 r1 $3 N j j j t2

8. 9. 10. 11. 12. 13. 14. 15.
Finding the Purchase Price of a Note to Meet a Required Yield
Clear TVM values (if not already cleared). Enter term of original note (in years). Enter interest rate of original note. Enter amount of original note. Compute original payment.
Recall total number of payments in original note, and store in memory. Enter number of payments already made.

]#* __ O __ j

Compute current unpaid balance. $4
Recall original number of payments. ]g
Subtract number of payments already made to find number of remaining payments, and save as N. Set FV to zero, and then enter required yield (for example, enter 10% as 10). Compute discounted present value.

X]#*j r4

Yield of a Discounted Mortgage
Clear TVM values (if not already cleared). Enter original term of loan (in years). Enter interest rate. Enter face value of mortgage loan. Compute payment amount.
Enter discounted purchase price. Enter number of payments already made and store in memory. Calculate number of payments remaining, and store as N. Compute annual yield for remaining term. $1 __ O __ j T g ]#*X]gj

Monthly house payments often include not only principal and interest (the payback on the loan), but also property taxes and insurance. Using the data you entered in the previous example, you can compute the total payment including principal, interest, taxes, and insurance (PITI).
Assume that the local property-tax rate is 1.5% annually and the annual insurance rate is 0.5%. If the selling price of the house is $153,000, what will be the total monthly payment?
1. Enter the local property-tax rate. Press 1.5 # Z. 2. Enter the annual insurance rate. Press.5 # Q. 3. Enter the selling price. Press 153 q @. 4. Compute PITI. Press $ &.
PITI= -1,208.89 PRC= 153,000.00 IS% = 0.50 TX%= 1.50
Note: The P&I payment was calculated on the previous page. The property tax rate (Z) and the insurance rate (Q) will remain in the calculator until you change them or remove the batteries. Turning the calculator off does not clear this information.

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BEAR-CH0.DOC BA Real Estate Guidebook Jackie Quiram Revised: 09/28/99 1:17 PM Printed: 09/28/99 1:20 PM Page 7 of 10
Amortization for the First Year
The Amortization model prompts you for the starting and ending payment numbers to define a range of payment periods. You can then use the TVM values you entered earlier to find the loan balance after the last payment and the total principal and interest paid in the range. Find the balance, principal, and interest after 12 payments.
1. To start Amortization, press %. 2. Enter the number of the first payment period (P1). Press 1 j to enter the value for P1 and advance to P2. 3. Enter the number of the last payment (P2), and compute balance, principal, and interest. Press 12 j to change P2 and start the list of results. The loan balance after P2 is displayed.

128,914.07

4. Advance to the amount of principal paid in the first 12 payments. Press j. 5. Advance to the amount of interest paid in the first 12 payments. Press j. To leave Amortization, press !.
INT= -10,360.75 PRN= -1,085.93

8 Getting Started

BEAR-CH0.DOC BA Real Estate Guidebook Jackie Quiram Revised: 09/28/99 1:17 PM Printed: 09/28/99 1:20 PM Page 8 of 10
Finding a Pay-off Balance
If the property is sold after 3.5 years, what amount will be required to pay off the loan? Use the Amortization model to find the balance after 3.5 years of payments.
1. To start Amortization, press %. 2. Enter the number of the first payment period (P1). Press 1 j to enter the value for P1 and advance to P2. 3. Calculate the number of payments in 3 years , enter as P2, and compute balance, principal, and interest. Press 12 O 3.5 j to calculate and enter P2 and start the list of results. The loan balance after P2 is displayed.

125,788.43

4. Show the amount of principal paid in 3 years. Press j 5. Show the amount of interest paid in 3 years. Press j. To leave Amortization, press !.
INT= -35,851.81 PRN= -4,211.57

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BEAR-CH0.DOC BA Real Estate Guidebook Jackie Quiram Revised: 09/28/99 1:17 PM Printed: 09/28/99 1:20 PM Page 9 of 10
Changing the Conditions of the Loan
You can change any of the TVM values and then compute a new value. Using the values you entered on page 6, find the monthly payment at 9% interest. Then find the monthly payment at 9.5% for a 15-year loan.
1. Change the interest rate to 9%. Press 9 1.

I% = 9.00

2. Compute the new payment at the higher interest rate. Press $ 3.

PMT= -1,046.01

3. Change the interest rate to 9.5%. Press 9.5 1.

I% = 9.50

4. Change the term to 15 years. Press 15 0.

TRM= 15.00

5. Compute the new payment amount (15-year loan). Press $ 3.

PMT= -1,357.49

10 Getting Started
BEAR-CH0.DOC BA Real Estate Guidebook Jackie Quiram Revised: 09/28/99 1:17 PM Printed: 09/28/99 1:20 PM Page 10 of 10

Estimating Appreciation

You are buying a $150,000 home that is expected to appreciate for the next five years at 3% per year. Estimate the value of the house at the end of five years.
1. Enter the current price of the home (starting value). Press 150 q # 7. 2. Enter the expected annual appreciation rate. Press 3 # :. 3. Enter the number of periods (years). Press 5 # 9. 4. Calculate the expected value at the end of five years. Press $ # 8.
V2 = 173,891.11 #PD= 5.00 APP= 3.00 V1 = 150,000.00

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BEAR-CH0.DOC BA Real Estate Guidebook Jackie Quiram Revised: 09/28/99 1:17 PM Printed: 09/28/99 1:20 PM Page 11 of 10
Qualifying a Buyer for a Loan
You have a buyer who has a total income of $6,200 per month, with monthly debts of $580. Assuming a 20% down payment at 7.5% annual interest for 30 years, a tax rate of 1.5%, an insurance rate of.5%, and an income/debt ratio of 28/36, what is the maximum sales price this buyer can consider?

1. Clear any previous TVM values. Press # -. 2. Enter income percent. Press 28 # m. 3. Enter debt percent. Press 36 # d. 4. Enter the property-tax rate. Press 1.5 # Z. 5. Enter the annual insurance rate. Press.5 # Q. 6. Enter the term of the loan. Press 30 0. 7. Enter the interest rate. Press 7.5 1. 8. Start the qualification. Press ?. 9. Enter monthly income amount. Press 6200 j.
INC= 6,200.00 INC= I% = 7.50 TRM= 30.00 IS% = 0.50 TX%= 1.50 DB%= 36.00 IN% = 28.00 0.00

12 Getting Started

BEAR-CH0.DOC BA Real Estate Guidebook Jackie Quiram Revised: 09/28/99 1:17 PM Printed: 09/28/99 1:20 PM Page 12 of 10
10. Enter monthly debt amount. Press 580 j.

DBT= 580.00

11. Enter down payment percent and compute PITI. Press 20 j.

DN%= 20.00

-1,652.00
12. Compute loan payment. Press j. 13. Compute loan amount. Press j. 14. Compute sales price. Press j. 15. Compute down payment amount. Press j.
DN$ = 45,507.24 QPR= 227,536.21 QLA= 182,028.97 PMT= -1,272.77
The buyer should consider a maximum sales price of $227,536.21 and a maximum loan of $182,028.97. Note: The income rate m and the debt rate d will remain in the calculator until you change them or remove the batteries. Turning the calculator off does not clear this information.

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BEAR-CH0.DOC BA Real Estate Guidebook Jackie Quiram Revised: 09/28/99 1:17 PM Printed: 09/28/99 1:20 PM Page 13 of 10

Going Further

The BA Real Estate calculator contains built-in financial formulas, or models, designed to solve common financial and real estate calculations. The remaining chapters in this book explain how to use the models. If you need to review general calculator operation, refer to the Appendix.
Permanent and Temporary Models
The calculator permanently stores some values you enter; others are retained only while you are using a particular model. INS %, TAX %, DEBT %, INC %, TAX&INS$, and the TVM values are stored permanently until you clear them, change them, or remove the batteries. Values in the other models share temporary storage space. To prevent conflicts, only one temporary model can be active at a time.
Temporary Financial Model Keys
Amortization Buyer Qualification Interest Conversion Annual Percentage Rate Adjustable Rate Mortgage Percent Change/Appreciation Bi-Weekly Mortgage Payments
Activating a Temporary Model
% >, ? F, G, H N M :, 7, 8, 9 L
Entering a value into a temporary model makes it the active model. If the model was not already active, the remaining values are set to their defaults.

The model remains active until you store a value in another model or perform a TVM calculation. While a model is active, you can store its values to memory or to the TVM values. Attempting to use ] or $ with an inactive model causes an error.
Worksheets for Real Estate Use
A set of worksheets based on these models is enclosed to use when working with clients. For most of the examples in this book, a completed worksheet is included after the keystroke solution to show how a worksheet can be used. You may copy the worksheets for your personal use with clients and customers. However, the worksheets may not be reproduced in any other publication without the written consent of Texas Instruments.

14 Getting Started

BEAR-CH0.DOC BA Real Estate Guidebook Jackie Quiram Revised: 09/28/99 1:17 PM Printed: 09/28/99 1:20 PM Page 14 of 10
This chapter describes real estate models relating to mortgages and amortization.

Chapter Contents

The Time-Value-of-Money (TVM) Model.. 16 Changing TVM Settings.. 17 Setting Default Rates for Your Area.. 18 Calculating Down Payments.. 19 Computing a Monthly Mortgage Payment.. 20 Finding the Unpaid Balance on a Mortgage.. 22 Paying Off a Loan with Larger Payments. 24 Calculating a Balloon Payment.. 26 Finding the Payment for a Mortgage with a Balloon. 28 Total Payment Including Taxes and Insurance (PITI).. 29 Computing Total Payment (PITI).. 30 Adjustable-Rate Mortgage (ARM).. 32 Finding Periodic Payments for an ARM.. 33 Comparing an ARM to a Fixed-Rate Mortgage.. 36 Bi-Weekly Mortgage Payments.. 40 Calculating a Mortgage with Bi-Weekly Payments.. 42 Finding the Balance on a Canadian Loan. 44 Amortization (AMORT).. 46 Finding the Principal and Interest Paid.. 47
Mortgages and Amortization 15
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The Time-Value-of-Money (TVM) Model
The TVM model lets you solve problems involving regularly occurring, even payments, such as loans. When you enter TVM values and settings, they are kept in memory locations reserved specifically for them. Using the other financial models does not affect these values and settings.
Cash Inflows (+) and Outflows (-)
The formulas for the TVM and Amortization models distinguish between inflows (cash you receive) and outflows (cash you pay out).

Steps Keystrokes 135 q X 80 A j Display 27,000.00
Calculate the down payment amount.
Calculating Down Payment When Sales Price is Not Known
You may need to calculate a down payment when the original sales price of the property is not known. If you have the loan amount and percentage, you can calculate the sales price and down payment amount. Assume that a client borrowed $125,000 on an 85% loan some years ago. What was the original sales price and down payment amount?
Steps Keystrokes 125 q B 85 A j Display 147,058.82
Divide loan amount by loan percent to find sales price. Calculate the down payment amount.

O 15 A j

22,058.82
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Computing a Monthly Mortgage Payment
Find the monthly payment on a home priced at $130,000 if the buyer makes a 10% down payment and finances the balance with a 30-year mortgage at 9.125% annual interest. If you are preparing a report for a client, fill in the worksheet as you calculate the results.

Solution

Press # , until the BGN indicator disappears.
Steps Keystrokes Display 0.00 P/Y = C/Y = TRM= I% = 12.00 12.00 12.00 30.00 9.13

Clear TVM values.

Set P/Y and C/Y to 12. # + 12 j j Enter term in years. Enter interest rate on the loan.

9.125 1

Enter price less down 130 q X 10 A payment. LN = 117,000.00 j2 Compute monthly payment. $3

PMT= -951.95

Find the monthly payment if the term of the loan is 15 years instead of 30.
Steps Keystrokes Display TRM= PMT= 15.00 -1,195.41
Change term to 15 years. Compute payment.
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Mortgage PaymentPrincipal and Interest
1. Clear TVM values (if not already cleared). 2. Enter sales price. 3. Subtract down payment. 4. Calculate and enter loan amount. 5. Enter term of loan (in years). 6. Enter interest rate. 7. Compute payment amount.

$130,000

10 $117,9.125

$.951.95

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Finding the Unpaid Balance on a Mortgage
Consider a mortgage loan of $250,000 that is to terminate in 25 years. At 8.5% annual interest rate, what will the unpaid balance be in 15 years?
Steps Keystrokes Display 0.00 P/Y = C/Y = 12.00 12.00 12.00
Set P/Y and C/Y to 12. # + 12 j j Calculate original mortgage payment.

8.250 q 2

$3 Enter the number of payments made in 15 years. Calculate unpaid balance. #*
TRM= 25.00 I% = 8.50 LN = 250,000.00 PMT= -2,013.07 N = 180.00 180.00

15 O 12 j

FV = -162,362.91
Note: You also can use the Amortization model to calculate unpaid balance. The answer may be slightly different, due to rounding differences between the two methods.
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Calculating Unpaid Balance on an Existing Mortgage
1. Clear TVM values (if not already cleared). 2. Enter original term of loan (in years). 3. Enter interest rate. 4. Enter original loan amount. 5. Compute payment. 6. Enter number of payments made. 7. Compute unpaid balance.

25 8.5 $250,000

$.2,013.07 180

$.162,362.91

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Paying Off a Loan with Larger Payments
A client has just borrowed $125,000 for 30 years at 7.75%. If she is able to increase her payment amount by $100 per month, how quickly can she pay the note off?
Steps Keystrokes Display 0.00 P/Y = C/Y = TRM= I% = 12.00 12.00 12.00 30.00 7.75
Set P/Y and C/Y to 12. # + 12 j j Enter term in years. Enter interest rate. Enter loan amount. Compute payment. Add extra payment amount as a negative value.

7.125 q 2

LN = 125,000.00 PMT= -895.52 -100

$3 a 100 t

$4 a]3

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Finding the Payment for a Mortgage with a Balloon
You are making a $70,000 loan at 8% over 30 years, with a balloon payment of $20,000 due at the end of the loan. How much will your monthly payment be?
Steps Keystrokes Display 0.00 TRM= I% = LN = FV = PMT= 30.00 8.00 70,000.00 -20,000.00 -500.22
Clear TVM values. Enter term in years. Enter interest rate. Enter loan amount.
Enter balloon amount 20 q t 4 as a negative. Compute payment. $3
Calculating Monthly Payment for a Mortgage with a Balloon Payment
1. Clear TVM values (if not already cleared). # 2. Enter term of loan (in years). 3. Enter interest rate. 4. Enter loan amount. 5. Enter amount of balloon payment, as a negative value. 6. Compute monthly payment.

$70,000 $20,000 $.500.22

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Total Payment Including Taxes and Insurance (PITI)
You can compute the total monthly payment including principal, interest, local property taxes, and insurance (PITI).
Values Used to Calculate PITI
The PITI calculation uses the selling price, the TVM values, and the values you have entered for the tax rate (# Z) and the insurance rate (# Q), or the actual annual tax and insurance amounts (# E). If you omit the selling price when calculating PITI with tax and insurance percentages, PITI will be calculated on the loan amount, which may underestimate PITI.
Procedure Using Selling Price
1. Press # - to clear the TVM values. 2. If you have not set the tax and insurance rates for your area, follow the instructions on page 18 before proceeding. 3. Enter the sales price (@) of the property. 4. Use the TVM keys to enter TERM, I%, and LOAN. Note: If the borrowers mortgage requires private mortgage insurance, that rate (for example, 1/4% to 3/8%) should be added to the annual interest rate. 5. Press $ & to display the result (PITI).

TRM= 30.00 I% = 8.00 LN = 115,000.00 PMT= N = YRS= SAV= -421.91 590.84 22.66 54,498.00

54,498.00

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1. Clear TVM values (if not already cleared). # 2. Enter term of loan (in years). 3. Enter interest rate. 4. Enter loan amount. 5. Start Bi-Weekly and view the bi-weekly payment amount. 6. View the number of bi-weekly payments (N) required to pay off loan. 7. View the number of years (YRS) required. 8. View the interest saved at the end of the term by making bi-weekly payments instead of monthly payments.

$115,000

$.421.91 590.84 22.66

$54,498.00

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Finding the Balance on a Canadian Loan
A client is moving to Canada and will be living there for five years. She will purchase a home while she is there and will sell it when she returns to the U.S. She is looking at a $185,000 home at 8% for 30 years. She has $17,000 to put down. Find her mortgage payment and her remaining balance after the five-year period.
Steps Keystrokes Display 0.00 P/Y C/Y = 12 2.00 2.00 30.00 8.25
Clear TVM values. Set payment periods. Set compounding periods for Canadian loan. Enter term of loan. Enter interest rate. Subtract down payment from price to compute loan. Compute payment. Enter number of payments during period and store as N.

## + 12 j2j

8.25 1

TRM = I% =

185 q X 17 q j 2 LN = 168,000.00

5 O 12 j

PMT = -1,245.83 N = 60.00
Compute balance after $ 4 five years.

FV = -159,879.69

Note: If you do not normally solve Canadian mortgage problems, be sure to restore the compounding periods per year to 12.
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Payment and Remaining Balance on a Canadian Mortgage
1. Clear TVM values (if not already cleared). 2. Enter number of payment periods per year. 3. Set compounding periods to semi-annual. 4. Enter term of loan (in years). 5. Enter interest rate. 6. Enter loan amount. 7. Compute payment amount. 8. Enter number of payments made, and store as N. 9. Compute balance at end of period.

30 8.25

$168,000.00 2

$.1,245.$.159,879.69 #*

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This chapter describes real estate models relating to qualifying the buyer for a mortgage loan.
Buyer Qualification: Maximum Loan Amount. 52 Buyer Qualification: Minimum Income Required. 53 Finding the Qualifying Loan Amount.. 54 Finding the Minimum Income Required.. 56 Finding the Maximum Allowable Debt.. 58 Finding the Net Cost of Housing.. 60

Buyer Qualification 51

Buyer Qualification: Maximum Loan Amount
You can calculate buyer qualification in one of two ways: by determining the maximum amount the buyer can afford to borrow, or by calculating the minimum income a buyer must have. This page describes the model based on loan amount, while the following page discusses the model based on minimum required income.
Values Used by Qualifying Loan Amount Model
To calculate the maximum loan for which a buyer can qualify, first enter the term of the loan, the interest rate, the income/debt ratio used in your area, if not already entered (see page 18), and one of the following:
The annual tax and insurance percentages applicable to the property (# Q and # Z). The total annual tax and insurance dollar amount (# E).
Then press ? to start the model. You can exit the Buyer Qualification model at any time by pressing !.
Name INC= DBT= DN%= Meaning
Enter monthly income and press j. Enter monthly debt and press j. Enter the down payment amount, or enter a two-digit number for the down payment percent, and then press j.* The total monthly payment including principal, interest, tax, and insurance. The monthly loan payment for which the buyer should qualify. The loan amount for which the buyer should qualify. The sales price for which the buyer should qualify. The down payment amount (useful if you entered down payment as a percent).
PITI= PMT= QLA= QPR= DN$=
* The calculator accepts any number greater than 99 as a down payment dollar amount.

52 Buyer Qualification

Buyer Qualification: Minimum Income Required
The Qualifying Income model lets you calculate the minimum income a buyer must have to qualify for a given sales price.
Values Used by Qualifying Income Model
To calculate the minimum income required to qualify for a loan, first enter the term of the loan, the interest rate, the income/debt ratio used in your area, if not already entered (see page 18), and one of the following:
Then press > to start the model. You can exit the Buyer Qualification model at any time by pressing !.

Meaning

Enter the sales price of the property and press j. Enter the down payment amount, or enter a two-digit number for the down payment percent, and then press j.* Enter monthly debt and press j. Loan amount. Monthly payment for the mortgage loan. Total payment including principal, interest, tax, and insurance. Monthly income required to qualify for the loan.

Example 1: Compounded Monthly
Clear TVM values. Set beginning-ofperiod payments. Set 12 payments per year.

##, # + 12 j

P/Y = C/Y =
Set 12 compounding periods per year. Calculate future value of the account.

TRM= 7.I% = 200 t 3

-200.00

FV = 111,438.31

Note: The quarterly compounding example is shown on page 68.

66 Other Financial Tools

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Savings Account with Regular Deposits
1. Clear TVM values (if not already cleared). 2. Set beginning- or end-of-period payments.* 3. Enter number of deposit periods per year. 4. Enter number of compounding periods per year. 5. Enter term of account. 6. Enter interest rate of account. 7. Enter initial deposit in account. 8. Enter subsequent regular deposits. 9. Compute value of account at maturity.

# , (as necessary)

20 7.$200

$111,438.31

* Most savings accounts will be calculated with beginning-of-period payments.

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Saving for the Future with Regular Deposits (Continued)
Example 2: Compounded Quarterly
What would the final amount be if the interest were compounded quarterly?
Set 12 payments per year.

# + 12 j

Set 4 compounding periods per year.
Calculate future value $ 4 of the account. Clear display and restore to end-ofperiod payments.* Restore C/Y to 12 per year. ! #, # + j12 j
FV = 110,801.04 0.00 C/Y = 12.00
* The calculator remains set to BGN or END until you change the setting.

68 Other Financial Tools

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Percent Change and Appreciation Model
A single model calculates both percent change and rate of appreciation (compound growth). You can enter any three of the model's values and compute the fourth.

#7 #8 #9

Enters the starting value. Enters the ending value. Enters the number of compounding periods during the change from V1 to V2. Enters the percent change from V1 to V2 (when #PD=1), or the rate of appreciation per period (when #PD > 1).
Note: #PD is automatically set to a value of 1 when you first activate this model.
A Note about Number of Periods
To calculate the total rate of change or appreciation, #PD must be set to 1. When #PD is set to a value other than 1, the calculated rate of change or appreciation is the periodic rate.

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Calculating Percent Change and Appreciation

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Setting the Fixed-Decimal Format
Although the calculator can display numbers with as many as 10 digits, you can set the number of displayed decimal places. The factory setting is two decimal places.

Setting the Format

(Where n = 0 through 9) Sets the number of decimal places displayed in results and turns on the FIX indicator.
If a number has more than n decimal places, it is rounded in the displayed result. If a number has fewer than n decimal places, trailing zeros are added to the displayed result.
Removes the fixed-decimal setting and turns the FIX indicator off.
Note: Turning the calculator off does not change the fixed-decimal setting.
Example Steps Keystrokes Display 0.00 0.
Clear the display and remove the fixeddecimal setting. Add 1 and.23456789. Set decimal to 2 places.

1 a.23456789 j

1.23456789
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Entering Numbers and Clearing the Calculator
You can enter up to 10 digits in a number; the calculator ignores any extra digits. Commas are inserted automatically in numbers to make them easier to read.
Entering and Clearing Numbers
The q key makes it easy to enter numbers that are multiples of 1,000. To enter 120,000, for example, press 120 q. The f (backspace) key lets you correct a numeric entry by erasing one digit at a time from the end of the entry.
Pressing the ! (ON/Clear) key once while entering a number clears the display. The calculation in progress is not cleared. You can enter the correct number and continue the calculation. Pressing ! twice clears the display and any incomplete calculation.
Pressing ! does not clear the user memory, TVM values, or any settings. If you press ! while viewing a list of results or a prompt for a value, the calculator removes the label from the display and exits the model. The value remains in the display and can be used in the next calculation.

Clearing Errors

An error condition, such as dividing by zero, causes the message Error to be displayed. To clear the error and any calculation in progress, press !.
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Calculations

The BA Real Estate calculator evaluates expressions immediately for some functions. Other functions are evaluated in the order they are entered.

Immediate Functions

The A, K, and # ; keys perform their functions immediately on the displayed number. For example, pressing 25 O 10 K displays the square of 10, not the square of 25 times 10. For the square of 25 times 10, press 25 O 10 j K. For other functions, such as a and O, you can replace an incorrect keystroke by immediately pressing the correct key. For example, pressing 15 O B 2 is the same as pressing 15 B 2. The j key completes all calculations.

Other Functions

Display of Results
All results are displayed to a maximum of 10 digits (or a maximum of 7 digits plus a 2-digit exponent for results shown in scientific notation). However, results are calculated and stored internally to 13 digits. A result whose exponent is greater than 99 is treated as an overflow, and an error message is displayed. A result whose exponent is less than -99 is set to zero, with no error message.

Using the Key

Pressing # tells the calculator to perform the alternate, or second, function of the next key you press. The second functions of keys are printed above the keys. The calculator displays the 2nd indicator to show that you are about to use a second function. If the next key you press has no second function, that key performs its normal function and clears the 2nd indicator. If you press # by mistake, press it again to cancel the second function.
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Basic Arithmetic

All basic arithmetic calculations are completed in the order in which you enter them. For example, 2 + 5 x 4 = 28.
Basic Arithmetic Functions

a, X, O, B

Perform addition, subtraction, multiplication, and division. Example:

12 O 5 a 60 B 3 j 40.00

Changes the sign (positive or negative) of the displayed number. The number can be either a result or a number you are entering. Example:

8 t a 12 j 4.00

Squares the number in the display. Example:

6 Ka 4 Kj 52.00

Calculates the square root of the displayed number. (The number must be positive.) Example:

4 a 256 # ; j 20.00

Completes all calculations and displays the result.
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Percent Calculations

You can calculate percentages, ratios, add-ons, and discounts.

Percent Functions

Operation

Percentage: nOpAj

Finds p% of the displayed number n (or the displayed result after O is pressed). Example:

250 O 5 A 0.05 12.50

j Ratio: nBpAj