1. What is Mortgage Amortization?

Mortgage amortization is the process of paying off a loan with regular payments over time. Each payment covers both principal and interest, with the interest portion decreasing and principal portion increasing over the loan term.

2. How Does the Calculator Work?

The calculator uses the mortgage payment formula:

Where:

• \( PMT \) — Monthly payment (USD)
• \( PV \) — Loan amount or present value (USD)
• \( r \) — Monthly interest rate (annual rate ÷ 12)
• \( n \) — Total number of payments (years × 12)

Explanation: The formula calculates the fixed monthly payment required to fully amortize a loan over its term, accounting for compound interest.

3. Importance of Mortgage Calculation

Details: Understanding your mortgage payment helps with budgeting, comparing loan options, and making informed decisions about home financing.

4. Using the Calculator

Tips: Enter the loan amount in USD, annual interest rate as a percentage, and loan term in years. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What's included in a mortgage payment?
A: This calculator shows principal and interest. Actual payments may include taxes, insurance, and PMI if applicable.

Q2: How does loan term affect payments?
A: Shorter terms mean higher monthly payments but less total interest paid over the life of the loan.

Q3: What's the difference between interest rate and APR?
A: The interest rate is the cost of borrowing, while APR includes fees and other loan costs.

Q4: How can I pay less interest?
A: Make extra principal payments, refinance to a lower rate, or choose a shorter loan term.

Q5: Are there different types of mortgages?
A: Yes, including fixed-rate, adjustable-rate, FHA, VA, and more. This calculator assumes a fixed-rate mortgage.