Mathematical Modeling of Real Estate Financial Analysis of Mortgage Loan

Abstract

Mathematics of finance for mathematical modeling of real estate financial analysis of mortgage loan is considered in this article. Financial mathematics describes the application of mathematical methods and mathematical modeling to solve financial problems. It is at times referred to as financial engineering, quantitative finance, and computational finance. Inflation and its effect on standard mortgage loan instrument causes problem for both borrowers and lenders which are analyzed. Adjustable interest rate which is called adjustable rate mortgage or variable payment provisions that change with economic conditions is also examined here. In addition, graphical comparisons have been shown between constant payment mortgage and price level adjusted mortgage loan. For the analysis, mathematical models are described with examples. Mathematical computations have been done by using Mathematica. This paper may be beneficial for the persons who exactly want to better understand the real estate for their personal investment and for making financing decisions.