Mortgage Amortization Calculator

How to Calculate Mortgage Monthly Payment

The monthly payment of a mortgage loan is calculated based on the following formula: \[ mp = Amount \frac{Rate(1+Rate)^{Term}}{(1+Rate)^{Term} - 1} \] Where Amount is the total loan amount.
Rate is the monthly interest rate that is calculcated by using annual interest rate divided by 12.
Term is number of month of the loan term.

This monthly payment also called the amortization amount. If you have escrow such as insurance and tax, your monthly payment will need to add those values.

How to Calculate Mortgage Loan APR

For mortgage loan with zero unfront cost, the APR is the same as your loan interest rate. If you pay fee or any other expense on the mortgage loan up front, the calculator can calculate a true APR that is defined as if the interest rate that will result the same amount of monthly payment for a loan amount before adding the cost to a loan amount that adding the cost with the original interest rate.

For example, for 15 years loan with amount of 200,000 bearing an interest rate of 4.5%, the monthly payment is calculated as 1530. Now, if you add 2000 cost to the loan amount, for the same interest and loan term, the monthly payment is 1545.29. Then we use the original loan amount of 200,000 and try to find the interest rate such that monthly payment will be 1545.29. And by solving an equation, we can find out the interest rate needs to be 4.651% and that is the APR for this case.

Understanding mortgage

With careful research and determination, you decided to buy a home. Congratulations for your exciting journey ahead. Sweet homeownership is a terrific way to create stability in your life and to start building wealth for your future. Now let us focus on how you understand your options and get the right mortgage for your situation.

A mortgage has three basic parts: a down payment, monthly payments and various fees.

• Down payment
The down payment is the up-front amount you pay to secure a mortgage to purchase a real estate or other assets. Most mortgage require a down payment of at least 3%. The larger your down payment, the better your financing deal will be. You'll get a lower mortgage interest rate, pay fewer fees and gain equity in your home more rapidly. In some cases, a down payment of at least 20% of the home's purchase price can help you avoid paying private mortgage insurance (PMI).
• Monthly payment
The monthly payment is the amount needed to pay off the mortgage over the length of the loan, including principal, interest, property taxes, homeowners insurance and PMI. Use our free mortgage calculator to estimate your monthly mortgage payment. See how your monthly payment changes by making updates to your home price, down payment, interest rate, and loan term
• Fees
The fees are various costs you have to pay up front to get the loan. The mortgage closing costs which typically run from 2% to 5% of the mortgage loan, the exact amount for each fee may vary, including:
• Appraisal fee ($300-$400)
• Home inspection ($300-$500)
• Application fee (varies)
• Assumption fee (varies)
• Attorney’s fee (hourly)
• Prepaid interest (based on loan amount)
• Origination fee (about 0.5% of loan amount)
• Discount points (1 point costs 1% of the loan amount)
• Mortgage broker fee (0.50% to 2.75%)
• Mortgage insurance application fee (varies)
• Upfront mortgage insurance (0.55% to 2.25%)
• FHA, VA and USDA fees (1% to 3.3%)
• Property taxes (two months’ worth)
• Upfront HOA fee (varies)
• Homeowners insurance (depends on home value and location)
• Title search fee (about $200)
• Lender’s title insurance (varies)
• Owner’s title insurance (0.5% to 1% of purchase price)

As a borrower/mortgagor, a key decision is whether you want a FRM(fixed-rate mortgage) or an ARM(Adjustable-Rate Mortgage) loan. All loans fit into one of these two categories, or the combination called Hybrid Mortgage category.

A fixed-rate mortgage (FRM), also often referred to as a "vanilla wafer" mortgage, is a fully amortizing mortgage loan where the interest rate on the note remains the same through the term of the loan. As a result, payment amounts and the duration of the loan are fixed and the borrower who is responsible for paying back the loan benefits from a consistent, single payment and the ability to plan a budget based on the fixed cost.

FRM (fixed-rate mortgage)

• 30 Year Fixed
• 20 Year Fixed
• 15 Year Fixed
• 10 Year Fixed
• FHA 30 Year Fixed
• FHA 15 Year Fixed
• VA 30 Year Fixed
• VA 15 Year Fixed
• USDA 30 Year Fixed
• USDA 15 Year Fixed

An adjustable-rate mortgage (ARM), variable-rate mortgage, or tracker mortgage is a mortgage loan with the interest rate on the note periodically adjusted based on an index which reflects the cost to the lender of borrowing on the credit markets. The loan may be offered at the lender's standard variable rate/base rate. There may be a direct and legally defined link to the underlying index, but where the lender offers no specific link to the underlying market or index the rate can be changed at the lender's discretion. The term "variable-rate mortgage" is most common outside the United States, while in the United States, "adjustable-rate mortgage" is most common, and implies a mortgage regulated by the Federal government, with caps on charges. In many countries, adjustable rate mortgages are the norm, and in such places, may simply be referred to as mortgages.

ARM (Adjustable-Rate Mortgage)

1. 3/1 ARM
2. 5/1 ARM
3. 7/1 ARM
4. 10/1 ARM

Hybrid Mortgage

1. 2-step mortgage
2. 2/28 ARM