On Thu, Jul 16, 2009 at 2:37 PM, Fred Jones<fredthejonester at gmail.com> wrote: >>> Really? I don't follow how. Because after 5 years I'm only paying >>> 130%. Am I missing something? >> >> No, he's right. The interest rate is 11.15%. I hadn't checked it before > > I suppose it's because 11% of the second year is less than the first > year. 20% less. So that's 8.8%. But calculating that 20% less each > year for 5 years, it's still more than 30% total. I still don't > follow. I would think it's actually .5% a month fixed which is 6% a > year. That times 5 years is the 30% that I am giving the bank. I don't follow your logic here, but if you pull up a regular ol' mortgage calculator, you can confirm that it's 11.15%. Year: 6% of $100 is $6 Month: 0.5% of $100 is $0.50... $100.50 0.5% of $100.50 is $0.5025... $101.0025 ... You'll get an effective rate of something like 6.2% I think you're just dividing the percentages in improper ways, but I can't tell. -- Matt Warden Cincinnati, OH, USA http://mattwarden.com This email proudly and graciously contributes to entropy.