The advanced mortgage calculator is a powerful tool for you as well as real estate agents, financial planners, and others. It accurately shows mortgage payments and other details so you can make the final financial decision.
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Mortgage Summary
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| Total Interest Paid |
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Monthly Amortization Schedule
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Note: This calculator is primarily for use by US residents.
Mortgage
A mortgage is a type of loan used to buy real estate, such as a home, apartment or commercial property. When you take out a mortgage, you agree to borrow a certain amount of money from a lender, such as a bank.
You must repay it over a specific period of time, with a standard interest rate. The property acts as collateral, which means that if you fails to make the required payments, the lender has the right to take ownership of the property through a legal process called foreclosure.
Components of a Mortgage
The key components of a mortgage are mentioned below:
- Principal: The original amount borrowed for the mortgage.
- Interest: The cost of borrowing the money, which is expressed as a percentage or Interest rates. It may be fixed or variable over time.
- Term: The length of time you have to repay the mortgage, usually it may 15, 20 or 30 years. A longer term means lower monthly payments but more interest paid overall.
- Down payment: This is an advance payment made by the buyer, which is a percentage of the purchase price of the property. When you make a larger down payment, it can reduce the amount you have to borrow.
- Monthly payment: The monthly payment includes both the principal and interest amount, which you have to pay on a monthly basis.
- Amortization: A schedule that shows how each payment is divided between paying down the principal and covering interest costs over time.
Types of Mortgages
Different types of mortgages are covered below for better understanding:
- Fixed-rate mortgage: The interest rate stays the same for the entire term, so your monthly payments may be easier to understand.
- Adjustable-rate mortgage (ARM): The interest rate changes periodically depending on market conditions, which can lead to lower initial payments but more risk when rates rise.
- FHA loans: Mortgages insured by the Federal Housing Administration allow you low down payments. But, it require a mortgage insurance.
- VA loans: For veterans, active service members, and eligible spouses, these loans are backed by the Department of Veterans Affairs and do not require a down payment.
- Jumbo loans: Mortgages for amounts greater than limits set by federal agencies, and used for high-value properties.
- Balloon mortgage: This offers lower monthly payments but requires a lump sum payment at the end of the term. For more information read on Investopedia.
How Mortgages Work?
There are several processes of mortgage approval:
- Application: You have to apply for a mortgage, and provide financial information, credit history, property documents, employment details for approval.
- Approval and down payment: Once approved, you will be required to make an advance payment, which will reduce the total amount borrowed.
- Repayment: You will have to make monthly payments as per the mortgage term. This will include both principal and interest amount.
Final Words
A mortgage is a fundamental part of home ownership, allowing you to spread the cost of purchasing a home/apartment over a number of years rather than paying the entire purchase price upfront.