Amortization Rates

[boont]

I was trying to forecast a mortgage payment today and reached for one of my interest amortization books. You may remember those old books we used to use pre-internet.They are full of tables that let you calculate your payment amortized over any given number of years and at various interest rates.

I usually find a payment on $100,000 at some rate say, 6.5% for 30 years and then multiply that by 5 or 6 or whatever to get the rate for a several hundred thousand dollar property.

Couldn't find the $100,000 rate. Kept thinking I was missing it and went back and forth in the pages until I realized the book only went to $20,000.

So I looked at the copyright date. 1952. So in 1952 the highest number in the book was $20,000. And the only rates of interest went from 5% to only 10% in 1/4 increments.

I then looked at my other amortization book from 1976. Price tops at $100,000 in this one and interest rates go all the way from 5% to 25.75%

How times change. I guess they don't even print the books anymore.

boont

 

[MasterBlaster]

Yeah, I've got one of those books from 1985 or so and the rates start at around 8 percent and go to 20 percent or so.

Now that was when rates were high.

We have it so good now !

And no they don't make those books any more. There are too many online calculators.

 

[justin]

FYI, some of my engineering and law texts had miniature versions of these amortization tables in them. Some from this century even!

 

[samclem]

I had several of those books. Also, I had a few cheap "interest rate" table books (future value of 1$, future value of $1 per period, etc). I think staring at those books and doing calculations with a hand calculator is when the light bulb really came on for me-- just seeing in the table's cells how much my monthly contributions could grow if I started early enough--and the "big deal" of getting an extra 1% by cutting expense ratios. I know that it's easier to do it online today, but I wonder if typing the numbers into an online calculator and seeing the result will have the same ability to capture the attention/imagination of younger folks.

Another lost way of doing calculations: Printed nomogram charts (start at the bottom, go up until you hit the appropriate line, turn 90 degrees until you hit the next appropriate value line, keep caroming around until you exit the chart at an axis that displays the value you are trying to find). We used them in the USAF for aircraft performance calculations (figuring out needed runway length if you know the airplane weight, temperature, humidity, density altitude, etc). It took some attention to detail and a fine pencil to get an accurate answer. I'm sure designing those nomograms was an art.

But, I digress . . .

 

[REWahoo]

We used them in the USAF for aircraft performance calculations (figuring out needed runway length if you know the airplane weight, temperature, humidity, density altitude, etc).

But you couldn't take off until the weight of the flight planning paperwork equalled the weight of the aircraft...

 

[samclem]

True. We also had a nomogram for evaluating the suitability of alternate landing locations while traveling cross country. It included inputs for the important factors about each candidate base: per diem rate, O Club bar closing time, distance to a college campus, etc.

 

[Nords]

Another lost way of doing calculations: Printed nomogram charts (start at the bottom, go up until you hit the appropriate line, turn 90 degrees until you hit the next appropriate value line, keep caroming around until you exit the chart at an axis that displays the value you are trying to find). It took some attention to detail and a fine pencil to get an accurate answer. I'm sure designing those nomograms was an art.

I remember the T. Rowe Price retirement workbook used similar nomograms & charts back in 1985 before they came out with a computerized version.

They never really allowed for ER. I kept having to extrapolate the tables down to age 40, the "years to retirement" down to 15 years, and the "years of retirement" out to 60-80 years. Of course those extrapolations made one doubt the validity of the calculations so I ended up searching for the original formulae, which turned into a financial research project and the beginning of my investor's education.

But you couldn't take off until the weight of the flight planning paperwork equalled the weight of the aircraft...

We used a similar rule to start up nuclear reactors.

 

[justin]

Um, we still use nomographs in my field of engineering! The dept. of transportation has them in its "engineering specifications and guidelines" book we have to use.

 

[renferme]

Hugh Chou has a great web site with lots of calculators; try it for mortgage amortization:

http://www.hughchou.org/calc/