Home Mortgage Rate Calculator Payment

Mortgage Payment Formula:

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

Monthly Payment (PMT):

Total Payment:

Total Interest:

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1. What is the Mortgage Payment Formula?

The mortgage payment formula calculates the fixed monthly payment required to fully amortize a loan over its term. It accounts for the principal amount, interest rate, and loan duration to determine consistent payments.

2. How Does the Calculator Work?

The calculator uses the standard mortgage payment formula:

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

Where:

\( PMT \) — Monthly payment amount
\( P \) — 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 payment needed to pay off the loan with interest over the specified term, with most of the early payments going toward interest rather than principal.

3. Understanding Mortgage Payments

Details: Mortgage payments typically include principal and interest. Property taxes and insurance may be included in an escrow payment. The amortization schedule shows how each payment affects the loan balance over time.

4. Using the Calculator

Tips: Enter the total loan amount (after down payment), the annual interest rate (APR), and the 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 the difference between APR and interest rate?
A: The interest rate is the cost of borrowing, while APR includes the interest rate plus other loan costs, giving a more complete picture of loan cost.

Q2: How does a larger down payment affect my mortgage?
A: A larger down payment reduces your loan amount, which lowers monthly payments and total interest paid over the life of the loan.

Q3: What's better - 15-year or 30-year mortgage?
A: 15-year mortgages have higher monthly payments but lower interest rates and pay off faster. 30-year mortgages have lower payments but higher total interest costs.

Q4: How does extra principal payment affect my loan?
A: Extra principal payments reduce your loan balance faster, saving interest and potentially shortening your loan term.

Q5: What are points in a mortgage?
A: Points are upfront fees (1% of loan amount) paid to lower your interest rate. Each point typically reduces the rate by 0.25%.