Mortgage Calculator

What is a Mortgage?

A mortgage is a loan used to purchase or maintain a home, land, or other real estate. The borrower agrees to pay the lender over time, typically in a series of regular payments divided into principal and interest.

Mortgages are secured loans, meaning the property itself acts as collateral. If the borrower fails to repay the loan, the lender has the right to seize the property through foreclosure.

There are different types of mortgages, including fixed-rate mortgages, adjustable-rate mortgages, and government-backed loans like FHA or VA loans. Each type has its own advantages and considerations depending on the borrower's financial situation.

How to Calculate Your Mortgage - Step by Step Guide

Step 1: Determine Loan Amount

This is the total amount you are borrowing from the lender.

Step 2: Enter Interest Rate

The annual interest rate charged on the loan.

Step 3: Set Loan Term

The duration of the loan in years (e.g., 15, 30).

Step 4: Calculate Monthly Payment

Use the formula to calculate your monthly payment:

P = L[c(1 + c)ⁿ]/[(1 + c)ⁿ – 1]

Frequently Asked Questions

What is included in the monthly payment?

The monthly payment includes both principal and interest.

Can I pay off my mortgage early?

Yes, but check with your lender for any penalties.

What is a fixed-rate mortgage?

A fixed-rate mortgage has an interest rate that remains constant throughout the life of the loan.

What is an adjustable-rate mortgage?

An adjustable-rate mortgage has an interest rate that can change periodically based on market conditions.

What is PMI?

Private Mortgage Insurance (PMI) is required if your down payment is less than 20% of the home's value.

What is an escrow account?

An escrow account is used to collect and hold funds for property taxes and insurance.

How does credit score affect my mortgage?

A higher credit score can help you secure a lower interest rate and better loan terms.

What is the difference between APR and interest rate?

The interest rate is the cost of borrowing the principal, while APR includes additional fees and costs associated with the loan.

What happens if I miss a mortgage payment?

Missing a payment can result in late fees, damage to your credit score, and potentially foreclosure.

Can I refinance my mortgage?

Yes, refinancing allows you to replace your current mortgage with a new one, often with better terms.