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 a valuable tool for homebuyers to plan their finances.

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 divided by 12)
• \( n \) — Number of payments (loan term in years multiplied by 12)

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

3. Understanding Mortgage Payments

Details: Your monthly payment consists of principal and interest. Early in the loan, most of your payment goes toward interest. Over time, more goes toward paying down the principal.

4. Using the Calculator

Tips: Enter the loan amount in dollars, interest rate as a percentage (e.g., 3.5 for 3.5%), and loan term in years. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Does this include property taxes and insurance?
A: No, this calculates only principal and interest. Your actual payment may include escrow for taxes and insurance.

Q2: What's the difference between fixed and adjustable rates?
A: Fixed rates stay the same for the entire loan term, while adjustable rates can change after an initial fixed period.

Q3: How does a larger down payment affect my mortgage?
A: A larger down payment reduces your loan amount, which lowers your monthly payment and total interest paid.

Q4: What is PMI?
A: Private Mortgage Insurance is typically required if your down payment is less than 20% of the home's value.

Q5: How can I pay off my mortgage faster?
A: Making extra principal payments or switching to biweekly payments can reduce your loan term and total interest.