Mortgage Rate Calculator

Mortgage Payment Formula:

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

Monthly Payment (USD):

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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 standard mortgage formula:

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

Where:

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

Explanation: The formula calculates the fixed monthly payment required to fully amortize the loan over its term.

3. Importance of Mortgage Calculation

Details: Accurate mortgage calculations help borrowers budget effectively, compare loan options, and make informed home-buying decisions.

4. Using the Calculator

Tips: Enter the loan amount, annual interest rate (as percentage), and loan term in years. All values must be > 0.

5. Frequently Asked Questions (FAQ)

Q1: Does this include taxes and insurance?
A: No, this calculates principal and interest only. Your actual payment may include escrow for taxes and insurance.

Q2: What's a typical mortgage term?
A: Common terms are 15 or 30 years, though other options (10, 20, 40 years) may be available.

Q3: How does interest rate affect payments?
A: Higher rates increase monthly payments. A 1% rate change can significantly impact your payment amount.

Q4: What if I want bi-weekly payments?
A: Divide the monthly payment by 2 and pay every 2 weeks (resulting in 26 payments/year = 13 monthly payments).

Q5: How accurate is this calculator?
A: It provides accurate principal+interest estimates, but actual lender quotes may vary slightly due to rounding methods.