1. What is a Mortgage Payment Calculator?

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

Purpose: It helps homeowners and potential buyers understand their monthly obligations when refinancing or taking out a new mortgage.

2. How Does the Calculator Work?

The calculator uses the standard mortgage formula:

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 calculates the fixed monthly payment needed to fully amortize (pay off) the loan over its term.

3. Importance of Mortgage Calculation

Details: Understanding your monthly payment helps with budgeting and determining how much house you can afford. It's especially important when refinancing to compare with your current payment.

4. Using the Calculator

Tips: Enter the loan amount, current interest rate (check today's refinance rates), and loan term (typically 15 or 30 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 property taxes and insurance (PITI).

Q2: How do interest rates affect my payment?
A: Higher rates increase monthly payments. Even a 0.5% difference can significantly impact your payment over 30 years.

Q3: Should I choose 15-year or 30-year?
A: 15-year loans have higher payments but lower interest rates and total cost. 30-year loans have lower payments but higher total interest.

Q4: How accurate is this calculator?
A: It provides precise principal+interest calculations, but actual lender quotes may vary slightly due to rounding methods.

Q5: When is refinancing worth it?
A: Generally when you can lower your rate by 0.75%-1% or change loan terms beneficially, considering closing costs.