Mortgage Loan Payment Calculator

Using a mortgage loan payment calculator can be a huge help as you consider buying a home or refinancing the mortgage rate on your present home. Just know that a mortgage loan calculator can only give you one piece of the puzzle. There are usually three more amounts added onto your monthly payment to cover :

1. your taxes,

2. your insurance, and

3. p.m.i. (all are explained below).

How to Use a Mortgage Calculator

Most mortgage payment calculators are pretty user friendly. You just enter :

1. the price of the home (or the amount you will be refinancing)

2. the down payment amount (“0” if you are figuring for refinancing a mortgage rate)

3. the term—that means the length of the loan (usually 30 years), and

4. the interest rate you plan to secure for your mortgage.

Then, you hit “calculate”, and the mortgage loan payment calculator will figure your monthly payment for you and you’re all done, right! WRONG!!! Most mortgage loan payment calculators will only give you the main portion of your monthly payment. That main portion consists of two parts: principal and interest.

• The principal part goes towards paying down your loan balance. The balance goes down every time you make a payment.

• The interest part goes to the lender. Interest, of course, is the fee the lender charges for letting you borrow the money to pay for your house.

I know, I know, that’s pretty basic, but in my years as a realtor, I learned never to give anyone the benefit of the doubt when it comes to their knowledge of mortgages. OK—on we go.

Although the principal and interest portion makes up the lion’s share of your mortgage payment, there can be as many as three other amounts tacked on to your monthly mortgage payment. These are taxes, insurance, and p.m.i. Most folks do not consider these amounts when using a mortgage loan payment calculator. And they end up being really disappointed when their payment is figured by a loan officer and it is several hundred dollars higher than the payment reflected when they used the mortgage loan calculator.

The calculator at the top of this page gives estimates on two out of three of these “extras”, namely taxes and p.m.i. Add another $75 to cover home owner’s insurance and you will have a good payment estimate.

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