How to Figure Out Mortgage Payments Using a Mortgage Calculator
Knowing your mortgage payment amount is a key aspect of being able to afford your home. When you are starting to think about buying a house, you can use a mortgage payment calculator to estimate whether a home is affordable for you. Mortgage calculators usually tell you how much interest you will pay over the life of the loan, too. After you have bought a home, you can use a mortgage calculator to calculate the impact of making extra payments.
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Instructions
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Look up the interest rate on your mortgage, if you already have one. If not, either go to a lender to get an interest rate quote or look up the average interest rates in your area to estimate what rate you might get. If you have bad credit, increase the rate by at least a half percent for your estimates.
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Look up the amount of the mortgage you took out, or the amount of the mortgage you would take out. Calculate the mortgage amount by subtracting the down payment from the purchase price.
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Look up the length of the repayment term. This is usually either 15 or 30 years, with a 30-year mortgage being the standard offering.
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Navigate to a website with a mortgage calculator (see Resources).
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Enter the numbers in the appropriate boxes. For example, you might enter an interest rate of 5.5 percent, mortgage amount of $149,000 and term of 30 years. If you are performing the calculations on an existing mortgage, enter the date on which the mortgage began.
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Click on the "Calculate" button to find your monthly principal and interest payment on the mortgage. In this example, it is $846.01.
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Add 1/12 of your annual property tax and homeowner's insurance costs to this to calculate your full housing payments. In most cases, your lender will have an escrow account for you to make payments for these each month.
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Tips & Warnings
If your down payment is less than 20 percent of the home's purchase price, you will probably have to pay private mortgage insurance in addition to your principal and interest payments. The amount varies, depending on how much you put down, but you usually owe 0.5 percent to 1 percent of your original loan amount each year until your loan balance is below 80 percent of your home's value.
Optionally, enter the amounts of any extra payments you plan to make monthly, annually or just once. Click on the button to recalculate the amortization table with these so you can see the impact they will have. Making extra payments reduces the amount of interest you pay overall.
