1. What is a Mortgage Calculator?

A mortgage calculator helps you estimate your monthly mortgage payments and understand how your payment is allocated between principal and interest over the life of your loan.

2. How Does the Calculator Work?

The calculator uses the standard mortgage formula:

Where:

• \( M \) — Monthly mortgage payment
• \( P \) — Principal loan amount
• \( r \) — Monthly interest rate (annual rate ÷ 12)
• \( n \) — Total number of payments (loan term in years × 12)

Explanation: This formula calculates the fixed monthly payment required to fully amortize a loan over its term.

3. Understanding Amortization

Details: Amortization is the process of paying off a debt over time through regular payments. Initially, a larger portion of each payment goes toward interest, but over time, more is applied to the principal balance.

4. Using the Calculator

Tips: Enter the loan amount, annual interest rate, and loan term in years. The calculator will show your monthly payment and a detailed breakdown of how each payment is split between principal and interest.

5. Frequently Asked Questions (FAQ)

Q1: What is included in a typical mortgage payment?
A: This calculator shows principal and interest only. Actual payments may include property taxes, homeowners insurance, and mortgage insurance.

Q2: How does a higher interest rate affect my payment?
A: Higher interest rates increase your monthly payment and the total interest paid over the life of the loan.

Q3: What is the benefit of making extra payments?
A: Extra payments reduce your principal balance faster, which decreases the total interest paid and shortens the loan term.

Q4: How does loan term affect my payment?
A: Shorter loan terms have higher monthly payments but significantly less total interest paid over the life of the loan.

Q5: Are there different types of mortgage loans?
A: Yes, common types include fixed-rate mortgages (rate stays the same) and adjustable-rate mortgages (rate changes periodically).