Home Equity Loan Payment Formula:
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The Home Equity Loan Payment Formula calculates the fixed monthly payment required to repay a home equity loan over its term. It accounts for the principal amount, monthly interest rate, and loan duration.
The calculator uses the home equity payment formula:
Where:
Explanation: The formula calculates the fixed monthly payment that will completely pay off the loan (principal + interest) by the end of the loan term.
Details: Accurate payment calculation helps homeowners budget for home equity loans, compare loan offers, and understand the long-term cost of borrowing.
Tips: Enter the loan amount in USD, monthly interest rate as a decimal (e.g., 0.005 for 0.5%), and loan term in months. All values must be positive numbers.
Q1: How do I convert APR to monthly rate?
A: Divide the annual percentage rate (APR) by 12 (months) and convert to decimal (e.g., 6% APR = 0.06/12 = 0.005 monthly rate).
Q2: What's the difference between home equity loan and HELOC?
A: A home equity loan provides a lump sum with fixed payments, while a HELOC (Home Equity Line of Credit) works like a credit card with variable rates.
Q3: Are there prepayment penalties?
A: Some loans have penalties for early payoff - check your loan terms. This calculator assumes no prepayment penalties.
Q4: Does this include property taxes and insurance?
A: No, this calculates only principal and interest payments. Your actual payment may include escrow for taxes/insurance.
Q5: How accurate is this calculator?
A: It provides precise calculations for fixed-rate loans. For variable-rate loans, it only estimates the initial payment.