Mortgage Rate Calculator Tool

Mortgage Payment Formula:

\[ M = P \times \frac{r(1 + r)^n}{(1 + r)^n - 1} \]

Monthly Payment (M):

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1. What is a Mortgage Rate Calculator?

Definition: This calculator determines the monthly mortgage payment based on loan amount, interest rate, and loan term.

Purpose: It helps homebuyers and homeowners estimate their monthly mortgage payments and understand how different rates affect payments.

2. How Does the Calculator Work?

The calculator uses the formula:

\[ M = P \times \frac{r(1 + r)^n}{(1 + r)^n - 1} \]

Where:

\( M \) — Monthly payment (USD)
\( P \) — Loan principal (USD)
\( r \) — Monthly interest rate (annual rate ÷ 12)
\( n \) — Number of payments (loan term in years × 12)

Explanation: The formula accounts for both principal repayment and interest charges over the life of the loan.

3. Importance of Mortgage Calculation

Details: Accurate mortgage calculations help borrowers budget effectively, compare loan offers, and understand the long-term cost of home financing.

4. Using the Calculator

Tips: Enter the loan amount, annual interest rate (without % sign), and loan term in years. All values must be > 0.

5. Frequently Asked Questions (FAQ)

Q1: Does this include property taxes and insurance?
A: No, this calculates only principal and interest. A complete mortgage payment may include taxes, insurance, and PMI.

Q2: How does the interest rate affect payments?
A: Higher rates increase monthly payments significantly over the life of the loan.

Q3: What's the difference between 15-year and 30-year mortgages?
A: 15-year loans have higher monthly payments but much less total interest paid.

Q4: How do I calculate just the interest portion?
A: Multiply the remaining balance by the monthly interest rate for any given month.

Q5: What if I make extra payments?
A: Additional payments reduce principal faster, saving interest and potentially shortening the loan term.