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Monthly Payment Formula:
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The Monthly Mortgage Calculator estimates your fixed monthly mortgage payment based on the principal amount, annual interest rate, and loan term. It uses the standard amortization formula to provide accurate payment calculations.
The calculator uses the amortization formula:
Where:
Explanation: This formula calculates the fixed monthly payment required to fully amortize a loan over its term, accounting for both principal and interest.
Details: Accurate monthly payment calculation is crucial for budgeting, loan comparison, and financial planning. It helps borrowers understand their long-term financial commitment.
Tips: Enter the principal amount in dollars, annual interest rate as a percentage, and loan term in years. All values must be positive numbers.
Q1: What is included in the monthly payment?
A: This calculation includes principal and interest only. Your actual payment may include property taxes, insurance, and PMI if applicable.
Q2: How does interest rate affect the payment?
A: Higher interest rates significantly increase monthly payments. A 1% rate increase can raise payments by 10-15% depending on the loan amount and term.
Q3: What's the difference between 15-year and 30-year mortgages?
A: 15-year mortgages have higher monthly payments but much less total interest paid. 30-year mortgages have lower payments but more total interest over the loan life.
Q4: Can I calculate payments for different loan types?
A: This calculator is designed for fixed-rate mortgages. Adjustable-rate mortgages (ARMs) require different calculations as rates change over time.
Q5: How accurate is this calculator?
A: This provides accurate estimates for fixed-rate mortgages. For exact figures, consult with your lender as rates and terms may vary.