Mortgage Calculator

Mortgage Payment Formula:

\[ Payment = \frac{P \times r \times (1+r)^n}{(1+r)^n -1} \]

Monthly Payment:

Total Payment:

Total Interest:

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1. What is a Mortgage Calculator?

A mortgage calculator helps you estimate your monthly mortgage payments based on the loan amount, interest rate, and loan term. It's an essential tool for home buyers to understand their financial commitments.

2. How Does the Calculator Work?

The calculator uses the standard mortgage payment formula:

\[ Payment = \frac{P \times r \times (1+r)^n}{(1+r)^n -1} \]

Where:

$ P $ — Principal loan amount ($)
$ r $ — Monthly interest rate (annual rate ÷ 12)
$ n $ — Number of payments (loan term in years × 12)

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

3. Importance of Mortgage Calculation

Details: Understanding your mortgage payments helps with budgeting, comparing loan options, and determining how much house you can afford.

4. Using the Calculator

Tips: Enter the loan amount, annual interest rate, and loan term in years. The calculator will show your estimated monthly payment, total payment over the loan term, and total interest paid.

5. Frequently Asked Questions (FAQ)

Q1: What's included in a mortgage payment?
A: This calculator shows principal and interest. Actual payments may include property taxes, insurance, and PMI.

Q2: How does loan term affect payments?
A: Shorter terms mean higher monthly payments but less total interest. Longer terms have lower payments but more interest overall.

Q3: What's the difference between fixed and adjustable rates?
A: Fixed rates stay the same; adjustable rates can change after an initial period, affecting future payments.

Q4: How much should I put down?
A: Traditionally 20% avoids PMI, but many loans allow lower down payments with additional costs.

Q5: Are there prepayment penalties?
A: Some loans charge fees for paying off early. Check your loan terms.