Home Mortgage Loan Amortization Calculator

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 Mortgage Amortization?

Mortgage amortization is the process of paying off a home loan over time through regular payments. Each payment covers both principal and interest, with the interest portion decreasing and principal portion increasing over the loan term.

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:

\( P \) — Principal loan amount (USD)
\( r \) — Monthly interest rate (annual rate ÷ 12)
\( n \) — Number of payments (loan term in years × 12)
\( PMT \) — Monthly payment amount (USD)

Explanation: The formula calculates the fixed monthly payment required to fully amortize the loan over its term, accounting for compound interest.

3. Importance of Mortgage Calculation

Details: Understanding your mortgage payment helps with budgeting, comparing loan options, and making informed decisions about home affordability and refinancing.

4. Using the Calculator

Tips: Enter the loan amount, annual interest rate, and loan term in years. All values must be positive numbers. The calculator will show monthly payment, total payment over the loan term, and total interest paid.

5. Frequently Asked Questions (FAQ)

Q1: What's included in a typical mortgage payment?
A: This calculator shows principal and interest only. Actual payments may include property taxes, insurance, and PMI if applicable.

Q2: How does loan term affect payments?
A: Shorter terms mean higher monthly payments but less total interest paid. Longer terms reduce monthly payments but increase total interest.

Q3: What's the difference between interest rate and APR?
A: The interest rate is the cost of borrowing principal. APR includes interest plus other loan fees, representing the true cost of the loan.

Q4: How can I pay less interest overall?
A: Make extra principal payments, choose a shorter loan term, or refinance to a lower interest rate when possible.

Q5: Are there different types of mortgages?
A: Yes, common types include fixed-rate (rate stays same), adjustable-rate (rate changes), FHA, VA, and interest-only mortgages.