1. What is the Mortgage Payment Formula?

The mortgage payment formula calculates the fixed monthly payment required to fully amortize a loan over its term. It accounts for the current balance, interest rate, and remaining term.

2. How Does the Calculator Work?

The calculator uses the mortgage payment formula:

Where:

• \( B \) — Current loan balance ($)
• \( r \) — Monthly interest rate (annual rate ÷ 12)
• \( remaining\ n \) — Remaining term in months

Explanation: The formula calculates the fixed payment needed to pay off the remaining balance over the remaining term at the given interest rate.

3. Importance of Accurate Mortgage Calculation

Details: Accurate mortgage calculations help borrowers understand their payment obligations, plan budgets, and evaluate refinancing options.

4. Using the Calculator

Tips: Enter current balance in dollars, annual interest rate as a decimal (e.g., 0.05 for 5%), and remaining term in months. All values must be positive.

5. Frequently Asked Questions (FAQ)

Q1: Why calculate from current balance instead of original loan?
A: Calculating from current balance gives the accurate payment needed for the remaining term, accounting for any principal already paid.

Q2: Does this include taxes and insurance?
A: No, this calculates only principal and interest. Your actual payment may include escrow for taxes and insurance.

Q3: How does extra principal payment affect this?
A: Extra payments reduce the principal faster, which would decrease the remaining balance and potentially shorten the loan term.

Q4: What's the difference between rate and APR?
A: This calculator uses the interest rate. APR includes fees and other loan costs for a more complete cost comparison.

Q5: Can I use this for other types of loans?
A: Yes, this formula works for any fixed-rate, fully amortizing loan (car loans, personal loans, etc.).