1. What is the Mortgage Payment Formula?

The mortgage payment formula calculates the fixed monthly payment required to fully amortize a loan of $1000 over the loan term. It accounts for both principal and interest payments.

2. How Does the Calculator Work?

The calculator uses the mortgage payment formula:

Where:

• \( r \) — Monthly interest rate (annual rate divided by 12)
• \( n \) — Total number of payments (loan term in months)
• 1000 — Principal loan amount

Explanation: The formula calculates the fixed payment needed to pay off a $1000 loan in full, with interest, by the end of the loan term.

3. Importance of Mortgage Calculation

Details: Understanding mortgage payments helps borrowers evaluate affordability, compare loan options, and plan their finances effectively.

4. Using the Calculator

Tips: Enter the monthly interest rate as a decimal (e.g., 0.005 for 0.5%) and the loan term in months. All values must be valid (rate > 0, months ≥ 1).

5. Frequently Asked Questions (FAQ)

Q1: How do I convert APR to monthly rate?
A: Divide the annual percentage rate by 12 (months) and by 100 (to convert from percentage to decimal).

Q2: Does this include taxes and insurance?
A: No, this calculates only principal and interest. Actual mortgage payments may include additional amounts for taxes and insurance.

Q3: What's the difference between interest rate and APR?
A: The interest rate is the cost of borrowing, while APR includes additional fees and costs associated with the loan.

Q4: How does loan term affect payments?
A: Shorter terms mean higher monthly payments but less total interest paid over the life of the loan.

Q5: Can I use this for other loan amounts?
A: This calculates payments for a $1000 loan. For other amounts, multiply the result by your actual loan amount divided by 1000.