1. What is a Bankrate.Com Mortgage Calculator?

Definition: This calculator estimates the monthly mortgage payment based on loan amount, interest rate, and loan term.

Purpose: It helps homebuyers and homeowners understand their potential mortgage payments before applying for a loan.

2. How Does the Calculator Work?

The calculator uses the formula:

Where:

• \( M \) — Monthly payment (USD)
• \( P \) — Loan principal (USD)
• \( r \) — Monthly interest rate (decimal)
• \( n \) — Number of payments (months)

Explanation: The formula calculates the fixed monthly payment required to fully amortize a loan over its term.

3. Importance of Mortgage Calculation

Details: Accurate mortgage calculations help borrowers budget effectively, compare loan offers, and avoid overextending financially.

4. Using the Calculator

Tips: Enter the loan amount, annual interest rate (as percentage), and loan term in years. All values must be > 0.

5. Frequently Asked Questions (FAQ)

Q1: Does this include taxes and insurance?
A: No, this calculates principal and interest only. Add property taxes, insurance, and PMI separately for a complete payment estimate.

Q2: How is the monthly interest rate calculated?
A: The annual rate is divided by 12 (months) and converted from percentage to decimal (divide by 100).

Q3: What's the difference between term and amortization?
A: They're the same in this calculation - the time to pay off the loan completely with regular payments.

Q4: Can I calculate payments for different frequencies?
A: This calculator assumes monthly payments. For biweekly, divide the annual rate by 26 instead of 12.

Q5: How accurate is this calculator?
A: It provides precise calculations for fixed-rate mortgages. Actual payments may vary slightly due to rounding.