Mortgage Calculator

Home Price 
Down Payment
Loan Termyears
Interest Rate 
Start Date

 Annual Tax & Cost
Property Taxes
Home Insurance
PMI Insurance
HOA Fee
Other Costs
 

Monthly Pay:   $2,166.20

 MonthlyTotal
Mortgage Payment$2,166.20$649,859.28
Property Tax$95.87$28,761.50
Other Costs$22.66$6,797.50
Total Out-of-Pocket$2,284.73$685,418.28
 
House Price$499,900.00
Loan Amount$428,100.00
Down Payment$71,800.00
Total of 300 Mortgage Payments$649,859.28
Total Interest$221,759.28
Mortgage Payoff DateNov. 2044

Payments

Mortgage Amortization Graph


The Mortgage Calculator helps estimate the monthly payment due along with other financial costs associated with mortgages. There are advanced options to include extra payments or annual percentage increases of common mortgage expenses. The calculator is mainly intended for use by the U.S. residents.

Mortgages

A mortgage is a loan secured by property, usually real estate property. Lenders define it as the money borrowed to pay for real estate. In essence, the lender helps the buyer pay the seller of a house, and the buyer agrees to repay the money borrowed over a period of time, usually 15 or 30 years. Each month, a payment is made from buyer to lender. A portion of the monthly payment is called the principal, which is the original amount borrowed. The other portion is interest, which is the cost paid to the lender for using the money. There may be an escrow account involved to cover the cost of property taxes and insurance. The buyer cannot be considered the full owner of the mortgaged property until the last monthly payment is made. In U.S., the most common loan is the conventional 30-year fixed-interest loan, which represents 70% to 90% of all mortgages. Mortgages are how most people are able to own homes in the U.S.

Mortgages are Secured Loans

Because a house or purchased property acts as collateral in exchange for the money borrowed to finance the purchase, mortgages fall under the category of secured loans. As a result, failure by the borrower to repay the borrowed money and interest to the lender gives the lender the right to take over the secured property. A foreclosure is a legal process in which a mortgaged property is sold to pay the debt of the borrower who defaulted.

Key Components of a Mortgage

A real estate mortgage usually includes the following key components:

The most common way to repay a mortgage loan is to make monthly, fixed payments to the lender. The payment contains both the principal and the interest. For a typical 30-year loan, the majority of the payments in the first few years cover the interest.

Costs Associated with Home Ownership and Mortgages

Monthly mortgage payments usually comprise the bulk of the financial costs associated with owning a house, but there are other important costs to keep in mind. These costs are separated into two categories, recurring and non-recurring.

Recurring Costs

Most recurring costs persist throughout and beyond the life of a mortgage, they are a significant financial factor. Property taxes, home insurance, HOA fees, and other costs increase with time as a byproduct of inflation. There are optional inputs within the calculator for annual percentage increases. Using these can result in more accurate calculations. In some cases, these routine costs combined can be more than the mortgage payment!

Non-Recurring Costs

These costs aren't addressed by the calculator, but they are still important to keep in mind.

Early Repayment and Extra Payments

In many situations, mortgage borrowers may want to pay off mortgages earlier rather than later, either in whole or in part, for reasons including but not limited to interest savings, home selling, or refinancing. However, before doing so, it is important to first check with mortgage lenders to see if they accept early or extra payments, as some will have prepayment penalties.

Prepayment Penalty

A prepayment penalty is an agreement, most likely explained in a mortgage contract, between a borrower and a mortgage lender that regulates what the borrower is allowed to pay off and when. Penalty amounts are usually expressed as a percent of the outstanding balance at the time of prepayment, or a specified number of months of interest. The penalty amount typically decreases with time until it phases out eventually, normally within 5 years.

There are two types of prepayment penalties, soft prepays and hard prepays. A soft prepay allows for the sale of a home without penalty, while a hard prepay penalizes a person for not only selling a home, but also refinancing it. Most mortgage lenders allow borrowers to pay off up to 20% of the loan balance each year. One-time payoff due to home selling is normally exempt from a prepayment penalty. Few lenders charge prepayment penalties in response to the sale or refinancing of a home, but be sure to review the loan terms carefully just in case. FHA loans do not have prepayment penalties.

Early Repayment Strategies

Aside from paying off the mortgage loan entirely, typically, there are three main strategies that can be used to payback a mortgage loan earlier. Borrowers mainly adopt these strategies to save on interest. These methods can be used in combination or individually.

  1. Refinance to a loan with a shorter term—Interest rates of shorter term mortgage loans will most likely be lower. This is because in the lenders' eyes, shorter loan lengths are less risky, so they are more willing to provide more favorable interest rates to the borrower. Keep in mind that this imposes higher financial pressure on the borrower due to the higher monthly mortgage payments. Also, there may be fees involved.
  2. Make extra payments—on typical long-term mortgage loans, a very big portion of the earlier payments will go towards paying down interest rather than the principal. Any extra payments will decrease the loan balance, thereby decreasing interest, and allowing the borrower to pay off the loan earlier in the long run. Some people form the habit of paying extra every month, while others pay extra whenever they can. There are optional inputs in the Mortgage Calculator to include many extra payments, and it can be helpful to compare the results of supplementing mortgages with or without extra payments.
  3. Make biweekly (once every two weeks) payments of half month's payment instead—since there are 52 weeks each year, this is the equivalent of making 13 months of mortgage repayments a year instead of 12. This method is mainly for those who receive their paycheck biweekly. It is easier for them to form a habit of taking a portion from each paycheck to make mortgage payments. Displayed in the calculated results are biweekly payments for comparison purposes.

Benefits of Early Repayment

There are a number of reasons for borrowers to pay off their mortgage sooner, either in whole or in part.

Drawbacks of Early Repayment

While paying off a mortgage earlier may sound like a great idea, it may not make sense in all cases.

Brief History of Mortgages in the U.S.

In the U.S., before the Great Depression, home mortgages were five to ten-year loans offered by private firms that only covered about 50% of a home's value, and the principal was due as a balloon payment at the end of the term. As a result, the prospect of becoming a homeowner as an American then was not as promising as it is today. The modern mortgage got its start in 1934 when the Federal Housing Administration (FHA) sought to find a way to pull the country out of the Great Depression. The FHA introduced a new type of home loan aimed at people who couldn't otherwise get them. Characteristics of these new mortgages included lower down payments, 30-year amortizations, 80 and 90% loan-to-values or higher, and universal standards for home qualification as well as construction standards, which were unheard of at the time. All of these characteristics contributed to mass home-ownership becoming a reality. The ease with which an American could own a home would go on to become one of the many factors known as the American Dream.