Mortgage Calculator

This mortgage calculator gives you an outlook on the cost of a fixed rate home loan. It calculates your monthly payment and a breakdown of everything you will pay by the end of the loan term. A pie chart summarizes these totals, so you can see at a glance how much of your money goes toward the home itself and how much goes to interest, taxes, and insurance. You can also add a fixed extra monthly payment to see how much sooner the loan would be paid off and how much interest that saves.

Using the values you enter, the calculator works through the loan one month at a time. At the beginning of each month it figures out how much of your payment covers interest on the remaining balance and how much reduces the balance itself. Each part of the payment is tracked at every step, which is what produces the totals, the chart, and the table.

The line chart shows how your payments add up over time. Your mortgage payment is split into its principal and interest parts, often called P&I. Contributions are the total of principal and interest plus escrow costs such as home insurance, property taxes, and homeowners association (HOA) fees. The table below the chart, known as your amortization schedule, lists the same values for every month of the loan.

Limitations

Escrow costs can only be estimated. Property taxes and insurance premiums usually change over time, and you are unlikely to know their exact values before signing your mortgage agreement. The calculator assumes the same interest rate for the whole loan, so it does not work for adjustable rate mortgages, and it does not include private mortgage insurance (PMI). Table values are calculated at the beginning of each month.

This tool helps you understand:

• how a small change in interest rate, spread over many years, can change your total cost by thousands of dollars.
• the tradeoff between the length of the loan and your monthly payment. A shorter loan has higher payments but costs much less in total.
• how an extra monthly payment, even a modest one, can shorten your loan and lower your total cost.

Knowing these numbers ahead of time means fewer surprises over the course of your loan. It also makes it easier to plan the rest of your finances, such as saving and investing, around your housing costs.

If you are comparing new loans with different rates or terms, run each one through the calculator and compare the monthly payment and the total contributions. The monthly payment tells you whether a loan fits your budget today. The total tells you what the loan costs over its full life.

If you're deciding whether to refinance, it takes a few more steps. First, find out where you are in your current mortgage by entering the details of your current loan, including its exact start date. In the amortization schedule, find the current month and note your contributions so far. Subtract that amount from the total expected contributions to see how much you have left to pay on your current loan.

Next, you will need your remaining loan balance, which is also shown in the schedule. Enter it as the loan amount for the new loan you are considering, but don't forget closing costs. These are typically 1% to 6% of the remaining balance and pay for the refinance itself. You can pay them upfront in cash, or most lenders will let you add them to the new loan. Refinancing generally makes sense only if the savings outweigh these costs within the time you plan to keep the loan.

Generally, longer loan terms have lower monthly payments. However, you end up paying more in the long run because the interest is spread over more years. Comparing a 15 year and a 30 year loan for the same amount is a good way to see how large that difference can be.

Your loan balance decreases slowly at first. In the beginning, the interest portion of your monthly payment is larger than the principal portion, because interest is charged on a large balance. As the balance shrinks, more of each payment goes toward principal. This is how amortized loans work by design, and it is why the balance line in the chart falls faster near the end of the loan.

Even a small extra monthly payment has a large impact on your loan duration and total cost, because every extra dollar reduces the balance that interest is charged on. A longer loan with optional extra payments gives you flexibility: you can pay ahead when money allows and fall back to the regular payment when it doesn't. If you can comfortably manage the higher payment, a shorter loan term saves even more.