Calculator Home Loan Mortgage
Calculator Home Loan Mortgage
Mortgage calculators are used to help a current or potential real estate owner determine how much they can afford to borrow to purchase a piece of real estate. Mortgage calculators can also be used to compare the costs or real interest rates between several different loans, determine the impact on the length of the mortgage loan of making added principal payments or bi-weekly instead of monthly payments. A mortgage calculator is an automated tool that enables the user to quickly determine the financial implications of changes in one or more variables in a mortgage financing arrangement. The major variables include loan principal balance, periodic interest rate compound interest, number of payments per year, total number of payments and the regular payment amount.
Mortgage calculator capability can be found on most financial calculators such as the HP-12C, in most desktop spreadsheet programs such as Microsoft Excel and on the Web.
Uses
When purchasing a new home most buyers choose to finance a portion of the purchase price via the use of mortgage. Prior to the wide availability of mortgage calculators, those wishing to understand the financial implications of changes to the five main variables in a mortgage transaction were forced to use compound interest rate tables. These tables generally required a working understanding of compound interest mathematics for proper use. In contrast, mortgage calculators make answers to questions regarding the impact of changes in mortgage variables available to everyone.
Mortgage calculators can be used to answer such questions as:
If I borrow $250,000 at a 7% annual interest rate and pay the loan back over thirty years, with $3,000 annual property tax payment, $1,500 annual property insurance cost and .5% annual private mortgage insurance payment, what will my monthly payment be? The answer is $2,142.42.
You can use an online mortgage calculator to see how much property you can afford. A lender will compare your total monthly income and your total monthly debt load. A mortgage calculator can help you add up all your income sources and compare this to all your monthly debt payments. It can also factor in a potential mortgage payment and other associated housing costs (property taxes, homeownership dues, etc.). You can test different loan sizes and interest rates. Generally speaking, lenders do not like to see all of your debt payments (including your property expense) exceed around 40% of your total monthly pretax income. Some mortgage lenders are known to allow as high as 55%.
Monthly payment formula
The fixed monthly payment for a fixed rate mortgage is the amount paid by the borrower every month that ensures that the loan is paid off in full with interest at the end of its term. This monthly payment c depends upon the monthly interest rate r (expressed as a fraction, not a percentage, i.e., divide the quoted yearly percentage rate by 100 and by 12 to obtain the monthly interest rate), the number of monthly payments N called the loan's term, and the amount borrowed P known as the loan's principal; c is given by the formula:
For example, for a home loan for $200,000 with a fixed yearly interest rate of 6.5% for 30 years, the principal is
P
= 200000
, the monthly interest rate is
r
= 6.5 / 100 / 12
, the number of monthly payments is
, the fixed monthly payment equals $1264.14. This formula is provided using the financial function
PMT
in a spreadsheet such as Excel. In the example, the monthly payment is obtained by entering either of the these formulas:
This monthly payment formula is easy to derive, and the derivation illustrates how fixed-rate mortgage loans work. The amount owed on the loan at the end of every month equals the amount owed from the previous month, plus the interest on this amount, minus the fixed amount paid every month. This fact results in the debt schedule:
The polynomial
appearing before the fixed monthly payment
c
(with
x
= 1 +
r
) is called a cyclotomic polynomial; it has a simple closed-form expression obtained from observing that
x
p
N
(
x
) −
p
N
(
x
) =
x
N
− 1
because all but the first and last terms in this difference cancel each other out. Therefore, solving for
p
N
(
x
)
yields the much simpler closed-form expression
Applying this fact about cyclotomic polynomials to the amount owed at the N th month,
With a fixed rate mortgage, the borrower agrees to pay off the loan completely at the end of the loan's term, so the amount owed at month N must be zero. For this to happen, the monthly payment c can be obtained from the previous equation to obtain:
which is the formula originally provided. This derivation illustrates three key components of fixed-rate loans: (1) the fixed monthly payment depends upon the amount borrowed, the interest rate, and the length of time over which the loan is repaid; (2) the amount owed every month equals the amount owed from the previous month plus interest on that amount, minus the fixed monthly payment; (3) the fixed monthly payment is chosen so that the loan is paid off in full with interest at the end of its term and no more money is owed.
Total Interest Paid Formula
The total amount of interest I that will be paid over the lifetime of the loan is the difference of the total payment amount ( c N ) and the loan principal ( P ):
where c is the fixed monthly payment, N is the number of payments that will be made, and P is the principal balance left on the loan.
In the United Kingdom, the regulatory body (The FSA - Financial Services Authority) which regulate the lenders (banks & building societies) have not enforced their authority to standardise the calculation of mortgages. The general public and many mortgage professionals are unaware that each lender calculates mortgages in completely different ways. Many UK lenders have, over the years, changed their calculation methods. Some have changed their calculations several times and as lenders have merged with each other, calculation methods are changed.
In Spain for example, their regulatory authority has issued and enforced a standard calculation method which is enforced by law, so comparison of Spanish mortgages is a level playing field and can be compared.
See also
- Bridge financing
- Financing
- Fixed rate mortgage
- Mortgage
- Promissory note
- Loan origination
- Subprime lending
Mortgage Calculator, Home Loan Calculator - Your ...
A comprehensive list of Mortgage and Home Loan Calculator tools provided by Your Mortgage, the leading independent mortgage magazine.
Mortgage Sum.com
Mortgage Calculator Amortization Schedule Home Insurance Home Equity Loan Calculator
Home Loan Calculator :: Mortgage Repayments Calculator ...
Home Loan Calculators that let you quickly and easily calculate home loan repayments, loan repayment time etc. including multiple lump sum payments, regular extra contributions and ...
Mortgage Calculator & Loan Calculator
Use this calculator to estimate your monthly home mortgage loan payments and print amortization table schedule.
Home Loan Calculator | Mortgage Calculator
Property home loan calculator. A mortgage calculator to calculate home loans repayments and compare loan interest rates Australia.
Mortgage Calculator | Online Home Loan Mortgage ...
Our easy-to-use mortgage calculator tool allows visitors to calculate financial terms and requirements relevant to their home purchase.
Home loan and mortgage calculators - BNZ
TotalMoney Calculator; What will my repayments be? How quickly can I repay my loan? ... on BNZ Classic,GlobalPlus, TotalMoney, Rapid Repay or Mortgage One home loans.
Mortgage Calculator - Home Loan Calculator
You’ve found Mortgage Calculator - Home Loan Calculator. Advanced mortgage calculator and home loan calculators from your Australian Mortgage provider.
Mortgage Calculator | Real Estate Loans | Home Loans ...
We provide mortgage rates and home equity loan rates for primary and second loan refinance. (Link example) Our online rates calculators help you quickly evaluate interest rate ...
Home Mortgage Payment Calculator
Mortgage Calculator. Enter your loan amount, your monthly interest rate, how often you will make payments (monthly or bi-weekly), and how long your loan will last in years.
Mortgage Calculator, Home Loan Calculator - Your ...
A comprehensive list of Mortgage and Home Loan Calculator tools provided by Your Mortgage, the leading independent mortgage magazine.
Mortgage Sum.com
Mortgage Calculator Amortization Schedule Home Insurance Home Equity Loan Calculator
Home Loan Calculator :: Mortgage Repayments Calculator ...
Home Loan Calculators that let you quickly and easily calculate home loan repayments, loan repayment time etc. including multiple lump sum payments, regular extra contributions and ...
Mortgage Calculator & Loan Calculator
Use this calculator to estimate your monthly home mortgage loan payments and print amortization table schedule.
Home Loan Calculator | Mortgage Calculator
Property home loan calculator. A mortgage calculator to calculate home loans repayments and compare loan interest rates Australia.
Mortgage Calculator | Online Home Loan Mortgage ...
Our easy-to-use mortgage calculator tool allows visitors to calculate financial terms and requirements relevant to their home purchase.
Home loan and mortgage calculators - BNZ
TotalMoney Calculator; What will my repayments be? How quickly can I repay my loan? ... on BNZ Classic,GlobalPlus, TotalMoney, Rapid Repay or Mortgage One home loans.
Mortgage Calculator - Home Loan Calculator
You’ve found Mortgage Calculator - Home Loan Calculator. Advanced mortgage calculator and home loan calculators from your Australian Mortgage provider.
Mortgage Calculator | Real Estate Loans | Home Loans ...
We provide mortgage rates and home equity loan rates for primary and second loan refinance. (Link example) Our online rates calculators help you quickly evaluate interest rate ...
Home Mortgage Payment Calculator
Mortgage Calculator. Enter your loan amount, your monthly interest rate, how often you will make payments (monthly or bi-weekly), and how long your loan will last in years.