Mortgage Calculator: Definition, Equation, and Benefits

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Whether you’re thinking about purchasing your first home or refinancing your current home, a mortgage calculator will prepare you to choose the mortgage that is right for you. As you evaluate different mortgage options, it’s important to understand what your monthly payment will be as well as how your interest rate, down payment, taxes, insurance, and other factors will affect it. Learn the benefits of using a home loan calculator below or test out our free and simple mortgage and amortization calculators now to see a detailed payment breakdown and full amortization schedule.

What is a mortgage calculator?

Mortgage calculators are digital tools that estimate your monthly mortgage payment. Mortgage calculators offer personalized loan recommendations depending on the required input. For example, our mortgage calculator requires you to provide your:

  • Mortgage amount
  • Mortgage period
  • Interest rate
  • Monthly mortgage insurance
  • Monthly hazard insurance
  • Monthly real estate taxes

With these inputs, our home loan calculator will equate your monthly mortgage payment. If you would like to crunch the numbers by hand instead of using our free and simple mortgage calculator, the standard equation is:

M = P[r(1+r)^n/(((1+r)^n)-1)], where:

  • M = the calculated monthly mortgage payment
  • P = the principal loan amount
  • r = monthly interest rate
  • n = number of payments over the loan’s lifetime

This formula, or our mortgage calculator, can help you to estimate your monthly mortgage payment. Try out different inputs for the mortgage amount, loan terms, and interest rate to see how your monthly payment would change!

How can a mortgage calculator help me?

Buying a home is an expensive decision that requires careful consideration. With our simple mortgage calculator, you can easily change the inputs to see how it affects your monthly payment and find the right loan terms for you. Since our home loan calculator does the math for you, you can quickly analyze different loan types, such as a 30-year fixed-rate mortgage vs. a 15-year fixed-rate mortgage. If you’re looking to purchase a home or refinance, you should be using a mortgage calculator to get started.

The benefits of using a mortgage calculator

A mortgage calculator can be an incredibly useful tool throughout the home loan process. Mortgage calculators:

  • Save you time
  • Save you money
  • Quickly compare rates
  • Help with budget planning
  • Teach you a lot about how mortgages work

The benefits of using a home loan calculator are undeniable. Next time you’re looking to purchase a home or refinance, save yourself time and money with a mortgage calculator!

Let’s get started

Use our free mortgage and amortization calculators to determine your monthly payment, including mortgage insurance, taxes, interest, and more.

To get started with the mortgage loan process, get a free rate quote or fill out our online loan application to get pre-approved!

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