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This has to do with mortgages. If one were to have a second mortgage for $85,000.00, and there were to be three parties making payments on the mortgage, with the first party being responsible for $40,000.00, and the other two parties responsible for $22,500.00 each. This would be a fifteen year loan with a rate of 5.99%. One payment of $717.00 per month will pay this loan off in the fifteen year period. Dividing the payments up the first party would be responsible for 47% of the total, or $336.99/month. The other two parties would be responsible for 26 1/2% each, or $190.01 each per month. Up to this point it seems fairly straight forward. However, the first party wants to make payments of $1500.00 monthly, and the other two parties want to make payments of $450.00/month each. This would shorten the loan and reduce the interest paid substantially.
How would one figure the math so that the first party does not pay too much on the principal compared to the two parties that are paying the lesser amount?
 

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Keep it simple and each party just pay the same 2x, 3x, or 4x the base amount, then each party stays even.
Steve
 

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Wouldn't it be simpler to just let the first party pay the $1500 a month? Then the other two parties could pay the first party for their share. Use a mortgage schedule based on the same 5.99% for a term that brings their payments closest to $450 a month each, perhaps 10 years or so.
 

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ummmm...

Assume that the original mortgage was taken out to finance G-scale operations yes? (85K is a reasonable expense here)


Do not forget the added value charge when carrying the cost for the other partners. If bank rate is 5.5% then add one point for servicing costs. (they bring the beer)


gg
 

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Discussion Starter #5
Thanks to all. Fortunately, in my browsing, I found mortgage tables on the web. I believe the problem is solved.
 
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