1. What is a Mortgage Payment Schedule Calculator?

Definition: This calculator shows the breakdown of each monthly mortgage payment into principal and interest components, along with the remaining balance.

Purpose: It helps homeowners understand how their payments are applied and how much interest they'll pay over the life of the loan.

2. How Does the Calculator Work?

The calculator uses these formulas for each payment period:

Where:

• \( I_k \) — Interest for month k (USD)
• \( P_k \) — Principal for month k (USD)
• \( B_k \) — Balance after month k (USD)
• \( r \) — Monthly interest rate (decimal)
• \( M \) — Monthly payment amount (USD)

Explanation: Each payment first covers the interest due on the remaining balance, then the remainder goes toward reducing the principal.

3. Importance of Payment Schedule

Details: Understanding the schedule helps with financial planning, shows the true cost of borrowing, and illustrates how extra payments can save interest.

4. Using the Calculator

Tips: Enter the loan amount, annual interest rate, and loan term in years. The calculator will show the monthly payment and full amortization schedule.

5. Frequently Asked Questions (FAQ)

Q1: Why does most of my early payment go to interest?
A: This is normal with amortized loans - interest is calculated on the current balance, which is highest at the beginning.

Q2: How can I pay less interest overall?
A: Make extra principal payments, refinance to a lower rate, or choose a shorter loan term.

Q3: What happens if I make an extra payment?
A: Extra payments reduce principal faster, saving interest and potentially shortening the loan term.

Q4: Is the interest rate compounded monthly?
A: Yes, mortgage interest is typically compounded monthly.

Q5: Why does my final payment sometimes differ slightly?
A: Due to rounding in calculations, the final payment might adjust to clear the exact remaining balance.