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Amortization Formula:
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The Mortgage Calculator By Month uses the standard amortization formula to calculate monthly mortgage payments based on principal amount, interest rate, and loan term. It helps borrowers understand their payment obligations and total loan cost.
The calculator uses the amortization formula:
Where:
Explanation: This formula calculates the fixed monthly payment required to fully amortize a loan over its term, accounting for both principal and interest.
Details: Accurate mortgage calculation is essential for financial planning, budgeting, and comparing different loan options. It helps borrowers understand the true cost of borrowing and make informed decisions about home affordability.
Tips: Enter the principal amount in dollars, annual interest rate as a percentage, and loan term in years. All values must be positive numbers with principal > 0, rate between 0-100%, and term between 1-50 years.
Q1: What is included in the monthly payment?
A: This calculation includes principal and interest only. Actual mortgage payments may also include property taxes, homeowners insurance, and PMI if applicable.
Q2: How does interest rate affect monthly payments?
A: Higher interest rates significantly increase monthly payments and total loan cost. A 1% rate increase can raise payments by 10-15% on a 30-year loan.
Q3: What is the difference between 15-year and 30-year mortgages?
A: 15-year loans have higher monthly payments but much less total interest paid. 30-year loans have lower monthly payments but significantly more total interest over the loan term.
Q4: Can I calculate payments for different payment frequencies?
A: This calculator assumes monthly payments. For bi-weekly or other frequencies, the formula would need adjustment for the payment period.
Q5: Does this account for extra payments or early payoff?
A: No, this calculates standard fixed payments. For scenarios with extra payments, a more advanced amortization schedule would be needed.