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.
To calculate your monthly interest charge, the bank takes the 18% APR and divides it by 12 months for the year. That comes to 1.5% of the average daily balance for the month. The average daily balance is a method of leveling out the amount you owe, which may fluctuate from day to day because of payment and purchases. The calculations to determine average daily balance sound complicated, but they're really rather simple.