How To Calculate Your Mortgage Payment
If you have a mortgage, you should learn about how to calculate your mortgage payment. A mortgage is a loan used to purchase real estate (such as a house). Mortgage loans vary depending on your credit and your income. There are also different types of mortgages. Some mortgages have an interest rate that stays the same throughout the life of the loan, while others will increase the interest rate after a certain amount of time. It is important that you take in these factors when calculating your mortgage payment.
In order to learn about how to calculate your mortgage payment, you will need:
- Basic information about your loan
- Figure out the principal of your mortgage. This will be the easiest step in calculating your mortgage payment. The principal amount is the amount of money you borrowed from the bank, excluding the interest. For the sake of this explanation, pretend that your principal is $200,000.
- Figure out your mortgage term. Your mortgage term is the amount of time you have to pay off your loan. To calculate your mortgage payment, convert years to months. Do this by multiplying the number of years in your mortgage by twelve. If your mortgage term is 30 years, this is the equivalent of 360 months.
- Figure our your interest rate. In order to calculate your mortgage payment, you will need to know your interest rate. If you have a fixed interest rate (i.e. an interest rate that does not change), calculating your mortgage payment will be simple. Let's say you have a ten percent interest rate on a $200,000 mortgage loan. Multiply the principal ($200,000) by the interest rate (ten percenet). You will get a value of $20,000. If you have an adjustable mortgage rate, you will have to do separate calculations for each adjustment phase and then add the values together.
- Calculate your mortgage payment. Multiply your principal amount ($200,000) by your interest rate (ten percent). In this example case, you should get a value of $20,000. This is the amount you will be paying in interest for every year that you take to pay back the mortgage loan. Now assuming your interest rate doesn't change and you want to pay off your mortgage in 30 years, multiply 20,000 by your mortgage term in years (30). Now add that amount to your original principal. In the example, the resulting value will be $720,000. Now divide 720,000 by 360, which will give you your monthly payment amount. You should get $1755.14.