How Mortgage Calculations Work
Understanding your monthly payments is crucial before taking out a loan. This Mortgage and Loan Calculator uses the standard amortization formula to determine exactly how much you will pay each month based on your principal amount, interest rate, and loan term.
Key Factors Affecting Your Loan
- Principal: The total amount of money you are borrowing.
- Interest Rate: The annual percentage rate (APR) charged by the lender. A lower rate can save you thousands over time.
- Loan Term: The duration of the loan. Longer terms (like 30 years) lower your monthly payment but increase the total interest paid.
Frequently Asked Questions
A 15-year mortgage has higher monthly payments but significantly lower total interest costs. A 30-year mortgage has lower monthly payments, making it more affordable month-to-month, but you will pay more in interest over the life of the loan.
No, this calculator focuses on Principal and Interest (P&I). To get your full "PITI" payment, you would need to add your estimated monthly property taxes and homeowners insurance premiums to the result shown above.