# Mortgage Calculator

Most mortgages are for 15 or 30 years, but what if you want to pay it off sooner or you’re wondering how much longer you have to go?

Use this mortgage calculator to see when your mortgage will be paid off and when you’ll own your home free and clear.

## How does a mortgage work?

A mortgage is an installment loan. You make payments in regular installments, for the same amount at the same time every month, until the loan is paid off.

Your payment could fluctuate if you have an escrow account or if you have an adjustable rate mortgage (ARM).

Once you pay off your mortgage, you’ll own your home free and clear.

If you sell your home before you pay off your mortgage, the proceeds of the sale will be used to pay off your loan.

If you refinance your home, your term is reset to either 15 or 30 years.

### Find out how much your monthly mortgage payment will be.

How to use this calculator
1. Initial Loan Amount - Put the total amount of money you’ll be borrowing here. This would be the cost of the house plus closing costs minus your down payment.
2. Loan Term - Add the number of years you’ll take to pay off your home. If you’re considering getting a mortgage or refinancing your current home, use 30 years to see what your payment would be.
3. Yearly Interest Rate (APR) - Enter your interest rate here. If you’re considering buying a home, use the prevailing interest rate currently being offered.
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Monthly Payment

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Total principal paid

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Total interest paid

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Loan Rates
Choose a purpose for your loan
Always free and will not impact your credit score.

## How the interest rate, mortgage amount, and loan term determine your monthly payment

The numbers you plug into the calculator find your monthly payments because of the following components:

### Amount of your loan

The more money you borrow, the higher your payments will be.

You can shop for the lowest interest rate, find a house that costs less, or apply a bigger down payment to your home purchase to get a lower monthly loan payment.

If you have an escrow account, your payment could fluctuate as well.

Escrow accounts are accounts where part of your payment is applied to pay for taxes and insurance.

### Interest rate

Unless you choose to refinance your loan or you have an adjustable rate mortgage, your mortgage interest rate will stay the same for the life of the loan.

To save money and lower your payments, look for the lowest interest rate.

Buyers with excellent and good credit get the best interest rates on their mortgages.

### Loan term

Terms for mortgages are typically 30 years, or 360 months. Though less common, 15-year mortgages are available as well.

With a 15-year mortgage, your payments will be higher, but you’ll pay off your mortgage in half the time and you’ll save money in interest.

## What Are Some Other Costs That Go Into Your Mortgage Payment?

Your mortgage payment is not just the price of the house itself. It is made up of fees and costs that are part of homeownership and include taxes, the price of the house, interest, and insurance, to name a few.

### What Is an Escrow Account?

You may know that escrow is part of the homebuying process if you are paying for your house with a loan. Escrow is also used once you have a mortgage to keep money in for expenses the lender will pay on your behalf.

Generally, escrow is a contractual and legal agreement in which a third party holds your money until a specific condition has been met. An escrow account attached to your home loan is when money is held by a third party, usually your lender, until your loan is paid in full.

### How Does an Escrow Account Work?

Once your mortgage payment is made to your lender, the lender takes one part of that payment to make your house payment. The remaining amount is deposited into an escrow account.

The money from your mortgage payment is dispersed to three different things: principal, interest, or your escrow account.

Some lenders will also add an “escrow cushion” fee to your mortgage. The purpose of an escrow cushion is to cover unanticipated costs, such as increases to taxes.

Your escrow account is where the funds that cover things like insurance premiums and other home insurance costs, and real estate taxes are taken from. Your mortgage payment includes the following costs and fees:

### Property taxes

These are the taxes that are imposed by state and local government entities that govern the land that your property is situated on.

These taxes are applied to both your house and the land that it sits on. Your property tax is an annual percentage, but this amount is broken down in twelve equal parts which is applied to your mortgage each month.

This amount is then placed in an escrow account and your property tax is taken from this account annually. Property taxes, like all government-imposed taxes, are mandatory for anybody that owns a home or property.

### Homeowners insurance

Homeowners insurance provides protection if damage occurs to your home, the land that your home is on, other property and personal belongings, and assets that are related to your home.

Homeowners insurance costs vary depending on many factors including where you live, the amount of coverage you have, and whether you’ve had any previous loss claims.

Just like your property tax, the annual cost of homeowners insurance is broken down into twelve payments that are included in your monthly payment and deposited in your escrow account. Your homeowners insurance is then taken out of your escrow account annually.

Most lenders won’t provide you with a home loan if you don’t maintain homeowners insurance.

### Mortgage insurance

Private mortgage insurance (PMI) is a type of insurance that protects the lender if you stop making mortgage payments.

Typically, a lender will require that you pay for PMI if you don’t make a down payment of at least 20% of the total price of the home that you are purchasing.

## How You Can Get a Lower House Payment

If you find yourself struggling to make your mortgage payment, there are ways to lower your monthly mortgage.

### Refinance

Refinancing your mortgage means that you are trading your current mortgage, including the amount of your monthly payment, interest rate, and insurance premiums for a new one. Your property taxes will always be the same as this amount is determined by the government.

Refinancing your home loan includes searching for a new lender that can offer more competitive mortgage terms (interest rate, principal amount, loan duration, monthly payment, etc).

Your new lender provides a new home loan that will allow you to pay your current loan off with the lender that you originally took your loan out with. You then pay your mortgage to your new lender.

Homeowners may refinance their home is if interest rates drop below their current rate and they want to lower their monthly payment and the cost of interest over the lifetime of their loan.

### Purchase a Cheaper House

If you want to not be out of money after you pay your mortgage each month, consider homes that are on the lower end of your budget.

Look for houses in cheaper locations, in suburbs of bigger cities, and be candid with your realtor about what you can and cannot afford.

### Avoid Late Fees

Failing to pay your mortgage on time and for the full amount every single month is one of the fastest ways to rack up late fees and to make your mortgage more expensive each month.

Every lender has some type of penalty for paying your mortgage late.

It will also begin to affect your credit if your mortgage is consistently paid late.

### Get Rid of PMI

The first way to avoid mortgage insurance is by making a down payment of 20% or more. Most lenders will not require PMI if your down payment is large enough.

If you did not make a 20% down payment when you initially purchased your home, you can request that your lender cancel your PMI retroactively once the remaining amount that you owe, also known as your loan-to-value ratio (LTV), is 80% or less.

If you have a government-insured loan, except for a VA loan, you will still have a mortgage insurance premium (MIP) if you did not make a 20% or greater down payment.

However, if you make a 10% down payment on your home and you are using a government-insured loan, your MIP is automatically taken away after 11 years of making consistent, on-time payments on your mortgage.

If you make a down payment of less than 10%, you will have to talk to your lender about eliminating your mortgage insurance or refinance your government-insured loan with a conventional loan.

### Look for Cheaper Homeowners Insurance

Finding homeowners insurance that is reasonably priced but that still has the coverage that you think is necessary is important and will require a bit of shopping.

You can request to raise your deductible for your monthly premiums to be reduced, but this may end up being more expensive if your home needs a large repair that requires you to file a claim.

Try getting your homeowners insurance from the same company that you get auto insurance from, It may be able to cut you a deal. Ask your insurance company what types of discounts they offer and if they will apply to you.

Home security can reduce the likelihood of a major disaster, and insurance companies offer discounts for customers with home security.

## Home Purchase and Payment Tips

Buying a home, while exciting, can also be daunting.

Knowing the best way to purchase and pay for your new home is crucial to secure your financial future.

### Know What Loan Length Is Best for You

Home loans come in 15- and 30-year options. Homeowners tend to opt for the 30-year loan. There are benefits to this option. Your payment will be lower than it would have been had you opted for the 15 year mortgage.

This means that if you keep your house for 30 years, you will be locked into paying a monthly mortgage payment for 30 years or until you sell or refinance your home.

It is important to consider where you will be in 15, 20, and even 30 years. Do you still want to be in the same house, will you be married, will you have kids or grandkids, do you want to make major renovations to the house?

A 15-year mortgage means that your monthly payment will be more than it would if you opted for the 30-year mortgage, but at what cost? In the long run, interest on a 15-year loan is much lower than a 30-year mortgage, ultimately costing you less in the long run.

### Try to Put At Least 20% Down

Making a down payment of 20% of the total cost of the house (not including other mortgage fees) can be the easiest and fastest way to lower your monthly mortgage payment.

This will cover a sizable chunk of the cost of the house, making your outstanding balance lower, and costing you less money in interest in the future.

This also means you do not have to pay for private mortgage insurance every month.

Another pro to making a 20% down payment is that your lender may lower your interest rate all together.

A 20% down payment proves to your lender that you can make the payments on your house and are more likely to be timely with your mortgage payments, as you have a lot more skin in the game.

### Avoid Using Credit Until You Close Escrow on Your Home

Taking out a line of credit of any kind, whether an auto-loan, a personal loan, a new credit card, or any other personal line of credit, will negatively affect your credit and possibly your ability to buy a home.

Borrowing money could cause your DTI (debt-to-income) ratio to go up, possibly to a level where you will no longer qualify for a home loan.

### Compare Multiple Lenders and Loan Types

Shopping around for different lenders could lower your interest rate. If a lender is eager to work with you, you can use interest rates from other potential lenders to leverage yourself into a lower interest rate.

It’s also important that you choose a lender who works well with you, not just your finances. After all, you will be working with your lender for 15-30 years unless you sell your home or refinance.

### Don’t Forget About Closing Costs

When your home sale is closed, this means that the documents are completed and the home is transferred from the previous owners to you.

There are different costs at the end of this process, known as closing costs.

These costs include processing fees that the borrower pays to the lender.

Generally, these costs include things such as home appraisals, searches on your new home’s title, and other costs that are incurred through the process of buying your new home.

This can result in fees that are a few or several thousand dollars that must be paid in order to officially own your new home.

## Frequently Asked Questions

Getting answers to your mortgage-related questions can make the purchasing process smoother and more enjoyable.

Do I have to continue to pay for homeowners insurance and property taxes if my home loan is paid off?

You are still required to pay any property taxes and homeowners insurance once your home is paid off.
However, because you are not paying your mortgage to your lender once your loan is paid off, your escrow account will be closed with that lender. This means that you are responsible for paying your property taxes and homeowners insurance directly to the bodies that maintain your property taxes and the homeowners insurance company.

What are the different types of loans I can get?

There are numerous types of loans that are available to homebuyers. Knowing the loan options that are available to you will make the homebuying process easier and more enjoyable. It will also make the long-term health of your finances and general enjoyment of your home better. Knowing which loan type works best for you can save you money and can get you a loan that is the best for you and your house. Loan types include:
· Conventional
· Jumbo
· Government-insured (FHA, USDA, VA)
· Fixed rate
· Adjustable-rate mortgage: An ARM loan has an interest rate that will fluctuate with the condition of the market.

Should I get a 15- or 30-year mortgage?

Knowing the absolute most that you can reasonably make each month, considering your income, other bills and expenses, and unexpected costs, is essential in considering what length of loan will be best for you, both now and years in the future.

Can I negotiate some of the terms of the mortgage?

Until you sign the loan agreement, you can negotiate the terms of your home loan with your lender.
It is important to bring any concerns, wants, and needs regarding the terms of your loan to your lender. It is important, however, to remember that your lender is also allowed to deny any of the terms that you are attempting to negotiate.

What is a mortgage broker?

A mortgage broker is an intermediate party between a lender and a borrower.
They are the middlemen that operate as a sort of matchmaker between lenders and borrowers. They help borrowers to find a lender that is the best match and can work the best for them and they both negotiate terms that will work the best for them.