1. What is a Mortgage Amortization Calculator With Escrow?

Definition: This calculator shows how each mortgage payment is split between principal, interest, and escrow over the life of the loan.

Purpose: It helps homeowners understand their mortgage payments and see how much interest they'll pay over time.

2. How Does the Calculator Work?

The calculator uses these formulas:

Where:

• \( I_k \) — Interest portion of payment (USD)
• \( P_k \) — Principal portion of payment (USD)
• \( B_k \) — Remaining balance after payment (USD)
• \( r \) — Monthly interest rate (decimal)
• \( M \) — Total monthly payment (USD)
• escrow — Monthly escrow payment (USD)

Explanation: Each payment first covers the interest due, then reduces the principal, with escrow being a fixed additional amount.

3. Importance of Mortgage Amortization

Details: Understanding amortization helps borrowers see how much they're paying in interest versus building equity, and how extra payments can shorten the loan term.

4. Using the Calculator

Tips: Enter the loan amount, interest rate, loan term in years, and monthly escrow amount. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What is included in escrow?
A: Escrow typically includes property taxes, homeowners insurance, and possibly mortgage insurance or HOA fees.

Q2: How does the interest rate affect payments?
A: Higher rates increase both your monthly payment and the total interest paid over the life of the loan.

Q3: Why does more of my payment go to interest early in the loan?
A: Interest is calculated on the current balance, which is highest at the beginning of the loan term.

Q4: How can I pay less interest overall?
A: Making extra principal payments reduces the balance faster, resulting in less interest paid over time.

Q5: Does this calculator account for variable rates?
A: No, this assumes a fixed-rate mortgage. For adjustable-rate mortgages, payments would change when the rate adjusts.