1. What is a Mortgage Calculator With Amortization Graph?

Definition: This calculator shows your monthly mortgage payment and displays a detailed amortization schedule with a visual graph.

Purpose: It helps borrowers understand how each payment is split between principal and interest over the life of the loan.

2. How Does the Calculator Work?

The calculator uses standard amortization formulas:

Where:

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

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

3. Importance of Amortization Understanding

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, annual interest rate, and loan term in years. The calculator will show your monthly payment and generate an amortization graph.

5. Frequently Asked Questions (FAQ)

Q1: Why does early payment go mostly toward interest?
A: Interest is calculated on the current balance, which is highest at the beginning of the loan.

Q2: How can I pay less interest overall?
A: Make extra principal payments or choose a shorter loan term to reduce total interest paid.

Q3: What's the difference between interest rate and APR?
A: APR includes both interest rate and other loan fees, giving a more complete cost picture.

Q4: How often is mortgage interest compounded?
A: Most mortgages use simple interest calculated monthly, not compound interest.

Q5: Can I change my monthly payment amount later?
A: Typically no, unless you refinance or have an adjustable-rate mortgage (ARM).