1. What is a Mortgage Calculator and Payment Schedule?

Definition: This calculator determines your monthly mortgage payment and generates a complete amortization schedule showing principal and interest breakdowns.

Purpose: Helps homebuyers and homeowners understand their mortgage payments and how each payment affects their loan balance over time.

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, with the remainder applied to principal. This creates the amortization schedule.

3. Importance of Mortgage Calculation

Details: Understanding your payment breakdown helps with financial planning, shows the true cost of borrowing, and reveals how extra payments can shorten your loan term.

4. Using the Calculator

Tips: Enter your loan amount, annual interest rate, and loan term in years. The calculator will show your monthly payment and generate a complete payment schedule.

5. Frequently Asked Questions (FAQ)

Q1: How is the monthly payment calculated?
A: Using the standard amortization formula that accounts for compound interest over the loan term.

Q2: 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.

Q3: How can I pay less interest overall?
A: Make extra principal payments, choose a shorter loan term, or refinance at a lower rate.

Q4: What's included in a typical mortgage payment?
A: Principal and interest (calculated here), plus often property taxes and insurance (PITI).

Q5: How does changing the loan term affect payments?
A: Shorter terms mean higher monthly payments but less total interest paid.