1. What is a Mortgage Calculator Payment and Amortization?

Definition: This calculator computes your monthly mortgage payment and shows how each payment is split between principal and interest over the loan term.

Purpose: It helps homebuyers and homeowners understand their mortgage payments and how their loan balance decreases over time.

2. How Does the Calculator Work?

The calculator uses these formulas:

Where:

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

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

3. Importance of Mortgage Amortization

Details: Understanding amortization helps you see how much interest you'll pay over the loan term and how extra payments can save money.

4. Using the Calculator

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

5. Frequently Asked Questions (FAQ)

Q1: Why does most of my early payment go to interest?
A: Interest is calculated on the current balance, which is highest at the start of the loan.

Q2: How can I pay less interest overall?
A: Make extra principal payments to reduce the balance faster.

Q3: What's the difference between term and amortization period?
A: They're usually the same for fixed-rate mortgages, but may differ for some loan types.

Q4: Does this include property taxes and insurance?
A: No, this calculates only principal and interest (P&I) payments.

Q5: How does a higher interest rate affect my payment?
A: Higher rates increase both your monthly payment and total interest paid.