The answer to the first question is easy. The APR on an interest only loan is
the interest rate. As the principal never reduces with an interest only loan,
there's no amortization you need to do.
For the second question, I would not consider prepaid interest as part of the
fee. It's a timing question. It allows you to make payments at the end of the
month, rather on, for example, the 27th as in the second loan.
--
Regards,
Fred
Please reply to newsgroup, not e-mail
"MK Manzer" <[email protected]> wrote in message
news:[email protected]...
> Two interest only loans, how the heck do I calculate APR?
>
> First -- $500,000 loan for 2 years (24 months) at 9.5% (3,958.33/mo). Fees
> of $11,090.56 are deducted from loan amount for a net funding of 488,909.44
> and include a 2 point origination fee ($10,000); prepaid interest from
> 6/23-6/30 of $1,055.56; and a $35 wire fee. Is prepaid interest is
> considered a fee for this calculation???
>
> Second - $1,250,000 loan for 3 years (36 months). First 2 years at 9.5%
> (9,895.83/mo); 3rd year at 10.5% (10,937.50/mo). Fees of $54,479.44 are
> deducted from loan amount for a net funding of $1,195,520.56 and include a
> 4.25% origination fee (53,125); prepaid interest from 6/27-6/30 ($1,319.44);
> and a $35 wire fee. Again, is prepaid interest considered a fee for this
> calculation?
>
>
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