Understanding Your Mortgage Payment
A mortgage payment is the regular amount you pay to your lender to repay the money you borrowed to buy a home. The most common type of mortgage is an amortizing mortgage, where each payment consists of two parts: principal and interest.
Principal: This is the amount of money you originally borrowed. As you make payments, a portion of your payment goes towards reducing this outstanding balance.
Interest: This is the fee the lender charges you for borrowing the money. Initially, a larger portion of your payment goes towards interest, but as your principal balance decreases, so does the interest portion of your payment over time.
The formula used to calculate the monthly mortgage payment (M) is as follows:
M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
Where:
- P = Principal loan amount
- i = Monthly interest rate (annual interest rate divided by 12)
- n = Total number of payments (loan term in years multiplied by 12)
This calculator helps you estimate your monthly principal and interest payment based on the loan amount, the annual interest rate, and the term of the loan. Keep in mind that this calculation typically does not include other potential costs like property taxes, homeowner's insurance, or private mortgage insurance (PMI), which would also be part of your total monthly housing expense.
Example Calculation:
Let's say you're taking out a mortgage for $250,000 with an annual interest rate of 6.5% over 30 years.
- Principal (P) = $250,000
- Annual Interest Rate = 6.5%
- Monthly Interest Rate (i) = 6.5% / 12 = 0.065 / 12 ≈ 0.00541667
- Loan Term = 30 years
- Total Number of Payments (n) = 30 * 12 = 360
Using the formula, the estimated monthly payment would be approximately $1,580.70. This calculator will provide a precise figure based on your inputs.
function calculateMortgage() {
var principal = parseFloat(document.getElementById("principal").value);
var annualInterestRate = parseFloat(document.getElementById("annualInterestRate").value);
var loanTermYears = parseFloat(document.getElementById("loanTermYears").value);
var resultDiv = document.getElementById("result");
if (isNaN(principal) || isNaN(annualInterestRate) || isNaN(loanTermYears) || principal <= 0 || annualInterestRate < 0 || loanTermYears <= 0) {
resultDiv.innerHTML = "Please enter valid positive numbers for all fields.";
return;
}
var monthlyInterestRate = annualInterestRate / 100 / 12;
var numberOfPayments = loanTermYears * 12;
if (monthlyInterestRate === 0) {
var monthlyPayment = principal / numberOfPayments;
} else {
var monthlyPayment = principal * (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments)) / (Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1);
}
resultDiv.innerHTML = "Your estimated monthly mortgage payment is:
(Principal & Interest)";
}
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