# Mortgage Calculator

## What is Mortgage?

A mortgage is a specific loan that is given by the lenders usually the agents or Banks. It involves the security of the assets of the borrower and the property of the borrower used as collateral. It is specific possession of a borrower which is given as security on loan. There are specific bank rates on which the mortgages were given.

## Why is it called a Mortgage?

The word mortgage means Death pledge, Means that there will be two choices either the obligation will be fulfilled or the collateral (property) is taken via foreclosure - a legal process in which the lender forces the sale of the property which is used as collateral.

## What is the formula for calculating Mortgage payments?

There is a specific equation for calculating mortgage payments. i.e

$$\text{M}\;=\;\text{p}\;\frac{\text{r}\left(1+r\right)^n}{\left(1+r\right)^n-1}$$

In the above equation

M stands for the total monthly mortgage amount

P shows the principal loan amount

r shows the monthly interest rate.

Divide the annual interest rate with 12 to have the monthly interest rate.

If your annual interest rate is 5 %: your monthly interest rate will be equal to 0.004167

$$\text{i.e}\;:\;\frac{0.05}{12}\;=\;0.004167$$

n shows the number of decided payments over the loan's lifetime. For calculating the number of payments of your loan, Multiply the number of years in your loan term by 12.

If you are having 30 years fixed mortgage plan, your number of payments will be:

$$30*12\;=\;360 \text{payments.}$$

$$You've 360 payments.$$

The above mortgage calculator with extra payments will show you the extra payments over the loan.

## What are the 3 types of Mortgages?

Different Mortgages are designed to aid borrowers. But the borrower should consider the best mortgage plan which is also convenient in the following three parameters.

Term dates (usually from 5 to 30 years), Interest rates, Amount of payments per period.

• Fixed-rate mortgage,
• Reverse Mortgage

## What is Fixed-Rate Mortgage?

In a fixed-rate mortgage, the interest rates will remain the same till the end of the loan. If the market interest rates increase, it does not impact on the borrower's payment. If rates drop, the borrower can refinance the mortgage by the lower rate.

With the adjustable-rate mortgage, The interest rate will be the same for an initial term but fluctuates when the market interest rate rises. The initial interest rate is usually a below-market rate which makes the mortgage easier but it will lie only for the short term unless the market interest rate rises.

## What is Reverse Mortgage?

In this mortgage plan, the borrowed loan becomes due and payable when the owner/ borrower dies or moves away permanently or he sells the home.

Just like the Mortgage calculator, you can calculate the reverse mortgage value accurately by using the reverse mortgage calculator.

## What is Commercial Mortgage?

The commercial mortgages aim to refinance, acquire or re-developed the commercial property. In such cases, the commercial mortgage calculator helps to conclude the commercial mortgage values.

Property tax is also a part of it. you can calculate the property tax accurately via a property tax calculator.

## How is monthly Mortgage calculated?

Analysis of a monthly mortgage amount is necessary to keep things constant in the long run.

For calculating the monthly mortgage value you can use this equation:

$$\text{L}\;\frac{\text{c}\left(1+c\right)^n}{\left(1+c\right)^n-1}$$

Here L stands for the loan, C stands for the per payment interest and N shows the payment number.

Considering the above values, you will get:

$$500,000\;\frac{0.004(1+0.004)^{360}}{(1+0.004)^{360}-1}$$

When you have decided to buy your dream home, you must be pre-planned to know the breakdown of what you might face monthly, what would be the interest rate in and over the life span of $350,000 mortgage. ## The Interest rate on a$350,000 house?

When you have a 30-year mortgage plan with a 4 % interest rate - you will pay $365,415.19 in interest over the time span of the loan. This amount is about two-thirds of what you have borrowed in interest. On a 15-year mortgage plan, you will pay$164,762.85 as interest over the life of the loan. It would be half of the interest you pay on a 30-year mortgage plan.

At a 4 % fixed interest rate the monthly mortgage payment over a 30-year mortgage might be $1,432.25 in a month. But with a 15-year mortgage plan, it might cost$2,588.91 monthly.

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