How to Calculate Mortgage Interest Fractions Into Decimals

Decimal interest rates are easier to compare than those with fractions.
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A mortgage interest rate represents the annual cost you pay as a percentage of your loan balance to borrow money. If you’re aware of them, you’ll see mortgage rates in advertisements, newspapers and many other places. While most rates are quoted as a decimal percentage, you might occasionally see one as a mixed-number percentage, which includes a fraction to the right of a whole number. To compare rates accurately and perform mortgage calculations, you can convert these mixed-number rates into decimal format with a couple of quick calculations.

Step 1

Divide the numerator by the denominator in the fraction portion of the mixed-number interest rate to convert that portion into a decimal. For example, assume you want to convert the interest rate 6 7/8 percent into a decimal. Divide the numerator, 7, by the denominator, 8, to get 0.875.

Step 2

Add the whole-number portion to your result and keep the percent sign to calculate the entire interest rate as a percentage in decimal format. You can compare this format with other quoted rates in the same format. In this example, add the whole number 6 to the decimal 0.875 and keep the percent sign to get a rate of 6.875 percent. When comparing this with, say, 6.9 percent and 6.75 percent, you can easily determine that it falls in between the two.

Step 3

Divide your result by 100 to calculate the interest rate as a decimal without the percent sign. Use this format in mortgage calculations. In this example, divide 6.875 by 100 to get 0.06875 as a decimal without the percent sign.

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