What is the "simple" way to - discount a mortgage? What are steps involved? Thank you.?

Answer 1

Your question is not clear, so I can't tell exactly what you want. However, I think you want the formula for the present value of a mortgage given the monthly payments and the interest (discount) rate.

The formula is:

V = A/r - A/[r*(1+r)^N]

where:
V = value of the mortgage
A = periodic payment
r = one period interest rate -- this is the yearly rate divided by number of payments per year
N = total number of payments to be made.

Answer 2

You can "buy down" the loan and the lender will add fees to your closing costs. Its pretty much buying your interest rate and hoping it will save you in the long run. You would need to buy down your loan quite a bit for it to make a big difference in your mortgage payment.

Go to bankrate.com and use the mortgage calculators if you want to see the difference for yourself.