This **mortgage calculator** estimates your monthly loan payment, total interest paid and the payoff date by 3 methods with or without extra payments or taxes or insurance costs. There is more information on this subject below the form.

## How does this mortgage calculator work?

As mortgage is one of the most used financial products across the world and within United States, this financial application was designed to help people simulate by 3 different approaches the mortgage loan payment schedule and its associated costs.

Thus this *mortgage calculator* has 3 tabs each one handling by case one of the following calculations in such a way to quickly adapt to the user’s needs (it can run from simple to very complex mortgage plan simulations):

- In case of Method 1 (first tab) the user may perform the most complex calculations that apart from the standard terms of a mortgage it considers as well its closing costs and any similar associated costs such as property tax or insurance or any type. Thus in this case the user should provide values for the following variables:

- Home price which is the property purchase price paid.

- Down payment value if the case. Please note that usually lenders requires somewhere between 5 and 20% from the home value. For instance in case of a home that is estimated to worth $100,000, the down payment value required may be between $5,000 and $20,000.

- Loan term in years as given in the offer or as desired.

- Annual interest rate % in percentage format.

- Payment frequency that can be any from: weekly, bi-weekly, monthly, bi-monthly, quarterly, semi-annually or annually. Most often people choose to repay on a monthly basis.

- Annual property tax figure which depends from one state or region to another.

- Annual home insurance.

- Annual PMI insurance in case it is requested by the lender. Most lenders require such insurance to protect them in case you go to default.

- Other annual fees & costs where applicable.

- Estimated loan start date that is used further on for the estimation of the moment when you will be debt free.

The relevant payments details that are returned in this case consist in:

- Monthly payment value or with other frequency as previously selected: weekly, bi-weekly, monthly, bi-monthly, quarterly, semi-annually or annually;

- Monthly property tax;

- Monthly home insurance;

- Monthly PMI insurance;

- Other monthly costs & fees;

- Monthly total out of pocket;

- Loan amount borrowed as the difference between the home price and down payment figure.

- Total paid;

- Total interest paid;

- Loan term;

- Annual interest rate;

- Payment frequency;

- Payoff date;

- Detailed amortization schedule that can be opened by clicking the “Open payment schedule” button.

- The second approach (second tab) allows users make quicker and simpler mortgage calculations while considering the following data that should be provided:

- Loan amount which is the effective amount of money borrowed. This can be estimated by subtracting the down payment (if the case) from the property price;

- Loan term in years. Usually the term varies between 5 and 30 years.

- Annual interest rate %.

- Payment frequency that can be any from the following: weekly, bi-weekly, monthly, bi-monthly, quarterly, semi-annually or annually.

- Loan start date.

The payment scenario consists in the details provided below:

- Monthly payment value or any regular as provided.

- Total paid.

- Total interest paid.

- Loan term in months.

- Payoff date.

- Detailed payment schedule that can be viewed by clicking the “Open amortization schedule” button.

- The third method allows users simulate mortgage repayment by adding extra payment to the current monthly payment value. In case the variables used by the algorithm are:

- Current loan balance which refers to be principal to be paid/left to be paid in case of an existing mortgage.

- Annual interest rate.

- Current monthly payment.

- Additional/extra monthly payment value.

The results displayed in this case consist in a comparison between paying with vs. without an extra payment. This way it is easy to see the difference between the two options:

Scenario: Payoff WITHOUT an additional/extra monthly payment

- Monthly payment amount;

- Remaining payment;

- Time to payoff;

- Total interest paid;

- Total paid for the mortgage;

Scenario: Payoff WITH an additional/extra monthly payment

- Additional monthly payment to principal;

- Adjusted monthly payment amount;

- Remaining payments;

- Time to payoff;

- Total interest paid;

- Total paid for the mortgage.

Conclusion:

Savings made by adding extra monthly payment to principal.

By paying early you will make fewer payments in a number of (…)

## General terms of a mortgage contact

- Loan amount you are eligible for is estimated by the lender by taking account of your annual gross income and on your current debts if the case.
- Down payment that can be expressed as a proportion from the home price or in absolute value. It represents how much the lenders asks you to pay upfront. Depending on the down payment level the lender may require you to take a PMI (private mortgage insurance). This is the case when the down payment is less than 20% of the property price. The PMI should be paid until the principal left to be paid on the mortgage represents less than 80% of the home price. Moreover, the down payment level has an impact too on the interest rate you will get, thus the higher the down payment percent is the better as you will get lower interest quotes.
- PMI – as explained above this is an insurance type requested by the lender in case the upfront payment you make is less than 20% of the home purchasing price and ranges from 0.25%-1.55% (most often is 1%) of the amount borrowed.
- Loan term to repay the principal + interest you owe can be expressed either in years or months. It varies between5 and 30 years (most often due to the fact the amount borrowed is significant the most preferred term is 30 years). It has an impact on the interest rate as the shorter the repayment period is the lower the interest rate will be.
- Interest rate charged can be fixed (case in which is often abbreviated as FRM – fixed rate mortgage) or variable (case in which is abbreviated as ARM from adjustable rate mortgage) and in financial institution’s offers can be found as the Annual Percentage Rate (APR) which normally includes as well the costs and fees associated with the transaction.
- Amortization schedule represents the detailed presentation of the repayment plan which in most cases is presented at a monthly level.

## What else to take account of when buying your own home?

In case of a real estate transaction for buying your own house is a bit more complex than the loan contract you will have to sing and pay for. That is why it is better to consider the following costs, taxes and fees you may also be requested to pay:

- Closing costs such as: property recording fee, appraisal fees, attorney fee, title service cost, property transfer tax, survey fee, application fees, brokerage commission, interest discount points, inspection fees, pro-rata homeowner association dues. It should be mentioned that not all of them apply in all cases, however statistical data show that in average closing costs represent between 2 and 5% from the purchase price of a home. For instance in case of a property estimated at $200,000 closing costs varies between $4,000 and $10,000.
- Costs with utilities, maintenance and repairs services or heating during the winter.
- Property tax paid to the local authority varies from one state to another between 0% and 4% or even up to 10% in some US states.
- Home Insurance which is different than the PMI insurance previously mentioned. It protects the holder from accidents that may happen to the property and its value depends on the location of the property, its status and condition. The home insurance cost varies between 0.15% and 5.5% of its value.
- Other costs such as HOA fees which is a monthly fee that is usually paid to the local Homeowners Association that maintains properties within the same neighborhood.

## Example of 3 calculations

Scenario 1:

In case of a mortgage with the following characteristics let’s figure out all the payments details:

- Home price = $250,000

- Down payment = $50,000

- Loan term = 30 years with monthly payment frequency

- Annual interest rate = 3.5%

- Annual property tax = $3,000

- Annual home insurance = $1,000

- Annual HOA fees = $1,200 (other costs)

- Loan start date is March 2015. The results displayed by the 1^{st} tab are:

■ Monthly payment (principal + interest): $898.09

■ Monthly property tax: $250.00

■ Monthly home insurance: $83.33

■ Other monthly fees & costs: $100.00

■ Monthly total out of pocket: $1,331.42

■ Home price: $250,000.00

■ Loan amount borrowed: $200,000.00

■ Down payment: $50,000.00

■ Total Paid: $323,312.18

■ Total Interest Paid: $123,312.18

■ Loan term: 360 months

■ Annual Interest rate: 3.50%

■ Payment frequency: Monthly

■ Payoff date: February, 2045

Scenario 2:

In case an individual wants to borrow $100,000 over 25 years at an interest rate of 3.8%, the payment frequency is monthly and the start date is June 2015:

RESULTS:

■ Monthly payment: $516.86

■ Loan amount: $100,000.00

■ Total Paid: $155,056.97

■ Total Interest Paid: $55,056.97

■ Loan term: 300 months

■ Annual Interest rate: 3.80 %

■ Payment frequency: Monthly

■ Payoff date: May, 2040

Scenario 3:

In case an individual has a mortgage of $150,000 that is repaid by monthly payments of $,1000/month (the fixed interest rate is considered to be 3.7%), what happens if he adds $400/month as an extra payment?

RESULTS:

Payoff WITHOUT an Additional/Extra Monthly Principal Payment

■ Monthly payment amount: $1,000.00

■ Remaining payments: 201.66

■ Time to payoff: 16 years & 10 months

■ Total interest paid: $51,659.40

■ Total paid for the mortgage: $201,659.40

Payoff WITH an Additional/Extra Monthly Principal Payment

■ Additional monthly payment to principal: $400.00

■ Adjusted monthly payment amount: $1,400.00

■ Remaining payments: 130.26

■ Time to payoff: 10 years & 10 months

■ Total interest paid: $32,361.12

■ Total paid for the mortgage: $182,361.12

■ Savings made by adding extra monthly payment to principal: $19,298.27

■ By paying early you will make fewer payments in a number of 71.40 payments.

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