This is how a lease option should work: After securing the go-ahead from a mortgage broker and before moving in, your potential buyer will give you a healthy, nonrefundable deposit to go toward the down payment of the house -- typically, 3 to 5 percent of the purchase price.
The amount of interest that accrues on your loan is determined by a simple daily interest calculation: Your current principal balance Ã The number of days since your last payment Ã Interest rate factor = interest rate Ã· 365.25 (number of days in a year) = Your daily interest rate.
Understand the interest expense formula. The formula to calculate interest is (principal amount) multiplied by (interest rate) multiplied by (period of time). Your principal is the loan balance that is still owed to the lender. Your rate of interest will be stated in the loan agreement.