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Mortgage Payment Formula:
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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.
The calculator uses the standard mortgage formula:
Where:
Explanation: The formula calculates the fixed payment that covers both principal and interest each month, resulting in the loan being paid off exactly at the end of the term.
Details: Texas has unique mortgage laws including restrictions on home equity loans and specific foreclosure procedures. Property taxes in Texas tend to be higher than national averages, which affects overall housing costs.
Tips: Enter the loan amount in dollars, annual interest rate as a percentage (e.g., 3.5 for 3.5%), and loan term in years. The calculator will show your estimated monthly payment, total payment over the loan term, and total interest paid.
Q1: Does this include Texas property taxes and insurance?
A: No, this calculates principal and interest only. Texas homeowners should budget additional 2-3% of home value annually for property taxes and insurance.
Q2: What's unique about Texas mortgages?
A: Texas has constitutional limits on home equity borrowing (80% LTV max) and requires a 12-day waiting period for home equity loans.
Q3: Are there prepayment penalties in Texas?
A: Texas law prohibits prepayment penalties on residential mortgages after the first 5 years of the loan.
Q4: How do Texas property taxes affect payments?
A: While not included in this calculation, Texas has no state income tax but higher property taxes, often collected through escrow as part of monthly payments.
Q5: What's the maximum loan term in Texas?
A: Standard terms are 15 or 30 years, but Texas allows terms up to 40 years for certain loans.