1. What is the Remaining Balance Formula?

The remaining balance formula calculates how much you still owe on your home loan after making a certain number of payments. It considers your monthly payment amount, interest rate, and remaining loan term.

2. How Does the Calculator Work?

The calculator uses the remaining balance formula:

Where:

• \( RB \) — Remaining balance ($)
• \( PMT \) — Monthly payment amount ($)
• \( r \) — Monthly interest rate (decimal)
• \( m \) — Number of remaining payment periods (months)

Explanation: The formula accounts for the present value of all remaining payments at the current interest rate.

3. Importance of Remaining Balance Calculation

Details: Knowing your remaining balance helps with refinancing decisions, understanding home equity, and planning your financial future.

4. Using the Calculator

Tips: Enter your monthly payment amount in dollars, monthly interest rate as a decimal (e.g., 0.005 for 0.5%), and remaining number of payments in months.

5. Frequently Asked Questions (FAQ)

Q1: How do I convert APR to monthly rate?
A: Divide your annual percentage rate (APR) by 12 (months) and then by 100 to convert to decimal.

Q2: Does this include escrow payments?
A: No, this calculates only the principal and interest portion of your payment.

Q3: How accurate is this calculation?
A: It's accurate for fixed-rate loans with consistent payments. Adjustable-rate loans may vary.

Q4: Can I use this for other loans?
A: Yes, it works for any amortizing loan (car loans, personal loans) with fixed payments.

Q5: Why does my remaining balance decrease slowly at first?
A: Early payments are mostly interest; principal reduction accelerates over time.