1. What is the Mortgage Balance Equation?

The Mortgage Balance Equation calculates the remaining balance on a loan based on the regular payment amount, interest rate, total loan term, and remaining term. This is useful for understanding how much principal remains to be paid on a mortgage.

2. How Does the Calculator Work?

The calculator uses the mortgage balance equation:

Where:

• \( B \) — Remaining balance
• \( payment \) — Regular payment amount
• \( r \) — Periodic interest rate (decimal)
• \( n \) — Total number of payments
• \( p \) — Number of payments remaining

Explanation: The equation accounts for the time value of money, calculating how much principal remains after a series of payments.

3. Importance of Mortgage Balance Calculation

Details: Knowing your remaining mortgage balance is crucial for refinancing decisions, selling your home, or planning early payoff strategies.

4. Using the Calculator

Tips: Enter the regular payment amount in dollars, interest rate as a decimal (e.g., 0.05 for 5%), total number of payments, and remaining payments. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Does this work for any type of loan?
A: This works for standard amortizing loans with fixed payments. It doesn't apply to interest-only loans or adjustable-rate mortgages.

Q2: How accurate is this calculation?
A: It's mathematically precise for fixed-rate loans, assuming no extra payments have been made.

Q3: Should I use annual or monthly rate?
A: Use the periodic rate that matches your payment frequency (monthly rate for monthly payments).

Q4: What if I've made extra payments?
A: This calculator assumes regular payments only. Extra payments would require a more complex calculation.

Q5: Can I use this for bi-weekly payments?
A: Yes, but you'll need to use the equivalent bi-weekly interest rate and adjust the term accordingly.