User talk:Chuck1962

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re: APR reply
I'll sight as my sources the text book "Principles of Engineering Economy", 8th Edition by Grant/Ireson/Leavenworth, ISBN 0471-63526-X; copyright 1990 by John Wiley & Sons, Inc. Also, the existing link on the APR page for efunda (ie, http://www.efunda.com/formulae/finance/apr_calculator.cfm). The method is pretty standard for calculating an effective interest rate from a series of debits and credits (the cash flow diagram.) I learned this method in a graduate level course on engineering economics. Believe it or not, it takes one or two semesters of college calculus to understand the solution to the interest rate problem because no closed form solution is avaliable and numerical methods must be used.

While the method for calculating the effective rate of the loan is standard, the fact that I am offering a calculator that lets the user effectively select the payback period for the closing costs is unique. I say this because I have trolled the net looking for something like this and have been unable to find another site. I would hope that this fact does not exclude this contribution since it is a mathamaticly verifiable fact that paying off a mortgage sooner than the original loan period will increase the effective APR if closing costs were paid at the loan origination (precisely the thing I was taught to do in my class.)

Here is a real-world example of how my mortgage calculator could help both an honest loan officer or broker and a consumer. Say a young professional is living in a condo with a 30-year, $150,000 mortgage at 6%. Now say the loan agent at the bank where the loan was originated two years earlier wants to sell a new loan at 5.75% with $2000 in closing costs. The question is, does it make sense for the borrower to agree to the new loan? The answer hinges on how long the borrower plans on staying with the current mortgage. The full-term APR is 5.8721% but the four year APR is 6.1314%. The borrower in this case would have to keep the new mortgage for at least 81 months or six years and nine months to realize a savings which is not very likely given the fact that condo owners tend to not stay in the same location for more than five years. An honest lender would realize this and wait for interest rates to fall further before making the sales pitch but a dishonest lender would hype the full-term APR to try and close the deal.

If you look at my last edits, you will see that the link goes directly to the mortgage calculator and not the home page for my wife's site. I hope this helps!

Chuck1962

re: APR
Good evening. I'm sorry that you took my comments as hostile. I actually don't have strong feelings one way or the other about the addition you proposed. I merely would prefer that the dispute be resolved through discussion. On Wikipedia, that generally happens better and more completely when we discuss concerns on the article's Talk page than when we make competing edits to an article. When two editors acting in good faith start repeatedly undoing each others' edits without explanation, we call that a revert war.

I certainly understand your comment about the weaknesses of some of the existing links in the APR article. I may have even been the one who added that link in an early draft of the article. Corrections or improvements are always welcome. We do tend to defer to "impartial" sources because we've had problems in the past with wikispam. The OCC's APR calculator may have lots of shortcomings but no one can accuse them of having an ulterior motive. If you know of a source for a better traditional APR calculator, I for one would encourage you to replace the OCC link.

I also think I understand your comment about the shortcomings of the traditional APR calculation. It's an interesting correction. Can you provide an independent source for your analysis. The difficulty that we run into is that Wikipedia has a strong policy against original research. We've found that to be an essential control in our quest to stay true to our goal - the creation of an encyclopedia. (Note that the proscription against original research is not what many people assume from the name. I encourage you to read the full article.)  If this is your personal analysis and original thought, our policy says we can't keep it in the article. On the other hand, if you can provide an independent citation for your analysis, then it is probably appropriate to keep in.

Lastly, I would encourage you to be patient with folks like GraemeL. Wikipedia really does have problems with serious spammers and we depend on folks like him to volunteer to patrol and keep them out. They see so much abuse that sometimes it's hard to remember to assume good faith. When mistakes happen, though, we can generally work them out through discussion. Thanks for your patience. I hope you stay and continue to contribute. Rossami (talk) 04:26, 9 September 2005 (UTC)