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, including both principal and interest components.

2. How Does the Calculator Work?

The calculator uses the standard mortgage formula:

Where:

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

Explanation: The formula accounts for compound interest over the life of the loan, calculating a fixed payment that pays off the loan exactly by the end of the term.

3. Importance of Extra Payments

Details: Even small extra payments can significantly reduce total interest paid and shorten the loan term. For example, an extra $100/month on a $300,000 mortgage could save tens of thousands in interest.

4. Using the Calculator

Tips: Enter the loan amount in USD, annual interest rate (Florida averages ~6.5% as of 2023), loan term in years, and any planned extra monthly payment.

5. Frequently Asked Questions (FAQ)

Q1: How do extra payments affect my mortgage?
A: Extra payments are applied directly to principal, reducing future interest and potentially shortening your loan term.

Q2: Are there prepayment penalties in Florida?
A: Florida law prohibits prepayment penalties on residential mortgages after the first 5 years of the loan.

Q3: What's the benefit of biweekly payments?
A: Making half-payments every two weeks results in 13 full payments per year instead of 12, which can significantly reduce your loan term.

Q4: How does Florida property tax affect payments?
A: This calculator shows principal/interest only. Florida property taxes average ~0.98% of home value and are typically escrowed with payments.

Q5: What about Florida insurance costs?
A: Florida homeowners insurance averages ~$3,600/year (higher in coastal areas) and is typically included in monthly payments via escrow.