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Monday, 26 September 2011 / Published in home mortgage, loan, Mortgage, mortgage calculator, mortgage insurance, mortgage payment

How to Calculate Monthly Mortgage Payments

It is important for anyone who is considering obtaining a home mortgage to learn how to calculate monthly mortgage payments or the amount of money you pay each month to buy your home. A variety of factors play a role in what this cost will be, including your interest rate, the length of the loan, your creditworthiness and the current lender’s requirements. 

More complicated than you might think

The problem with learning how to calculate monthly mortgage payments is that the process is pretty complex mathematically. In short, your loan is not the principle borrowed amount divided by the number of monthly payments. However interest plays a significant role in this process.

The real issue is that the interest on a mortgage loan is compounding, which means that it applies to the current balance of the loan. Also important is the fact that most of your monthly payment starts out with being interest payment while over time, the percentage you pay each month increases until you are paying nearly all principle.

 

Making It Faster

So, how can you calculate the monthly mortgage payment you are likely to pay? A good place to start is with a mortgage calculator. Many of these can be found online and are free of charge. None of your personal information is gathered in this process, and all you will just need to enter the terms for a loan you are considering and it will do all of the mathematical work for you.

This method does allow for individuals to get information right away as it does give you an instant quote on basic amounts and rates. It will also allow you to:

  • Compare how much of a difference a down payment makes on the loan.
  • You can determine how paying over a long period, or a shorter period can affect the monthly payment
  • You can compare the interest rates of various loans provided to you by lenders

 

Nothing beats personal advice

The good news is that an online mortgage calculator is easy to use and can provide you with an estimate about the loan you hope to get. However, be very cautious with the information you find online as it may not apply to your specific situation.

Things to watch out for with online mortgage calculators:

  • These online calculators may or may not accurately apply things like taxes, home owners insurance and other fees such as condo dues
  • You may not accurately judge the rate you qualify for
  • Mortgage insurance may vary depending on the type of loan
  • Rates fluctuate daily

Our best advice is to speak to one of our helpful team members and get an exact quote and payment estimate for the home you want.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Tagged under: fees, home owners, interest, online calculator, payment, percentage, rates, terms

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