APR on my HELOC does not calculate as I think it should. Why?

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basic formula- borrow $40k at 8.75% APR during draw period interest only payment should be= (40,000 x .0875 )/12 months = $291.67/month but I am paying $330.17/month at this APR. What am I missing?

Also, look at the BofA website- they claim a $40k for 283/month but also claim 7.25% rates.

Isn't it = (40,000 *.075)/12 months = 250/month? wouldn't 283/month on a 40k loan equal out to 8.5% interest rate?

http://www.bankofamerica.com/loansandhom...

I'm missing something in the calculation or something in hidden fees I don't quite get. Any help is appreciated.

APR on my HELOC does not calculate as I think it should. Why?

(1) Bank of America is correct.

I followed your link to its website. Below its published APR (which was 6.99% when I visited the site) there is a link that says "Assumptions". Click on "Assumptions" and you'll get a popup window that shows different APRs for different states. The popped up note correctly shows monthly payments of $283 at 8.49% APR, and $258 at 7.74% APR.

(2) As for your own case, is it possible that you did not use the APR applicable to your state?

(3) To answer your additional question: your calculation of payment for interest-only payment is CORRECT. It's just that simple.

HELOC rate is variable. If you're certain that the 8.75% APR is the correct rate for the period you're considering, ask your lender to disclose and explain how he arrived at the monthly payment of $330.17 that works out to be 9.905% APR! You'll be able to tell then what causes the discrepancy.

APR on my HELOC does not calculate as I think it should. Why?

Your calculations are assuming that the interest is compounded annually, normally this is not the case. 8% interest per year does not equal 8/12=0.6667% per month.

your payment is pretty close to the amount of a capital and interest payment (as opposed to interest only) as $330.17 monthly payment would pay of $40K @ 8.75% in 24.65 years.



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