Tag Archives: Average Life Formula

Fast Formulas #3: The Spreadsheet

Posted on August 21, 2012 by Win Smith

Fast Formulas #3: Pool Average Life with CPR Prepayments showed a shortcut for finding the weighted average life (“WAL”) of a homogenous pool of loans assuming a constant prepayment rate.  The shortcut, Formula 3.1, takes just a few steps to calculate … Continue reading →

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Fast Formulas #3: Pool Average Life with CPR Prepayments

Posted on July 22, 2011 by Win Smith

Fast Formulas #2: Average Life of Mortgage (Amortizing with Balloon) presented a compact formula for calculating the average life of a mortgage that pays as scheduled until it is paid off with a “balloon” payment before the scheduled end of its term.  It occurred to … Continue reading →

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Fast Formulas #2: Average Life of Mortgage (Amortizing with Balloon)

Posted on July 17, 2011 by Win Smith

Fast Formulas #1: Average Life of Mortgage (as Scheduled) showed a quick way to calculate the weighted average life (“WAL”) of a fixed-rate mortgage that pays as originally scheduled.  I found this formula (which is probably not original) by substituting the standard  level … Continue reading →

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Fast Formulas #1: Average Life of Mortgage (as Scheduled)

Posted on July 14, 2011 by Win Smith

The weighted average life (“WAL”) of a mortgage is the average time until principal is repaid.  It is also the average amount of time that the principal is outstanding.  Recall that for a standard fixed-rate mortgage with level payments, the principal … Continue reading →

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Puzzle #3: A Better Answer

Posted on June 2, 2011 by Win Smith

Puzzle #3 asked for the weighted average life (“WAL”) of the principal payments for a 30-year mortgage that is cut short by a balloon payment at 15 years. The following information was provided: $100,000 Principal; 5% Interest Rate; $536.82 Level … Continue reading →

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Puzzle #3: Mortgage with Balloon

Posted on April 15, 2011 by Win Smith

Puzzle #1 posed the question: given a $100,000 mortgage at 5% with monthly payments of $536.82 for 30 years, what is the average life of the principal payments? The puzzle was to be solved with just a few simple calculations. … Continue reading →

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Puzzle #1: Mortgage Average Life

Posted on February 10, 2011 by Win Smith

Here is the first in a series of puzzles that might have something to do with finance or math. The first to respond with a correct answer will be recognized in The Well-Tempered Spreadsheet Hall of Really Smart People. First, … Continue reading →

Posted in Fun, Math, Puzzles | Tagged , , , , , , | 21 Comments