Excel - using the Scenario Manager to track house payments with skyrocketing mortgage rates

Posted on: 11/01/2022

Updated: November 1, 2022

For potential homeowners, one year makes a HUGE difference. In 2021, we saw some of the lowest mortgage rates in the last 30 years. In July 2021, the average rate on 30-Year Fixed-Rate Mortgages was 2.87% (source FreddieMac). Today, November 1, 2022, we are looking at rates around 7.20% (source Bankrate). A $450,000 loan for 30 years is a difference in principal and interest of $1,189 a month.

Interest Rate - 2021 vs. November 2022 — **Interest Rates - 2021 vs. November 2022**

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Excel's Scenario Manager

That is a significate spike. We will use Excel's Scenario Manager to review the changes in house payment (payment and interest) with mortgage rates for a 400,000 home and then a $550,000 home. Four scenarios will be created. We will also use several Excel functions including CUMIPMT and CUMPRINC to see how much interest and principal is paid over the first three years of the loan.

**Scenario Manager - Mortgage Rates for home**
*Columns D & E are comparing a 400K home at different rates*
*Columns F & G are comparing a 550K home at different rates*

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In Excel, you have input cells and dependent cells. When creating scenarios you use the input cells. To generate a Scenario Report we use the dependent cells.

YouTube video - Scenario Manager

Chapters:

00:00 Introduction
01:04 Where I get my data
02:07 Starting the project
02:24 PMT
04:00 CUMIPMT
05:00 CUMPRINC
05:43 Scenario Manager
06:09 Naming the range
06:51 Create scenarios
08:57 Analyzing the scenarios
10:32 Add scenarios to a new sheet
11:42 Closing

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CUMIPMT and CUMPRINC Functions in Excel

CUMIPMT will return the cumulative interest paid on a loan between two periods.
CUMPRINC will return the cumulative priincipan paid on a loan between two periods.

Examples =-CUMIPMT(B1/12,B2*12,B3,1,36,0) would be the cumulative interest between the 1 payment and the 36 payment of a home mortgage loan. The negative symbol makes the result a positive number.

Arguments

Rate - Required. The interest rate.
Nper - Required. The total number of payment periods.
PV - Required. The present value.
Start_period - Required. The first period in the calculation. Payment periods are numbered beginning with 1.
End_period - Required. The last period in the calculation.
Type - Required. The timing of the payment.

**CUMIPMT Function in Excel**
This function shows that $69,470 is paid in interest on a 400,000 loan at 5.90% interest in the first three years.

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Chris Menard

Chris Menard is a Microsoft Trainer (MCT) and works as a full-time Trainer at BakerHostetler - one of the largest law firms in the US. Chris runs a YouTube channel with 900+ technology videos that cover various tools such as Excel, Word, Zoom, Teams, Gmail, Copilot, Google Calendar, and Outlook. To date, the channel has helped over 20 million viewers. Menard also does 2 to 3 public speaking events yearly, presenting at the Administrative Professional Conference (APC), the EA Ignite Conference, the University of Georgia, and CPA conferences. You can connect with him on LinkedIn at https://chrismenardtraining.com/linkedin or watch his videos on YouTube at https://chrismenardtraining.com/youtube.