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Loan Amount, Interest Rate, Loan Term
Try this simple mortgage calculator to see how your loan amount, interest rate, and loan term determine the payoff of your loan principal over time.
For simplicity, this mortgage calculator includes the financed loan amount only, without these fees that may or may not apply to your loan:
- Private mortgage insurance (PMI)
- Property taxes
- Home insurance
- Homeowners association (HOA) fees
For information about these types of fees and how they are paid, see our post What Are Closing Costs?
It’s our job to get you the best terms for your buying situation! If you experiment with this mortgage calculator, you’ll see how a longer loan term might lower your monthly payment, but changes the total interest you’re paying over the life of the loan.
What is Amortization?
All installment loans like auto loans, home loans, and personal loans like those used for debt consolidation are amortized. You pay the balance down to zero over time with level payments.
“Amortization is the process of spreading out a loan into a series of fixed payments over time. You’ll be paying off the loan’s interest and principal in different amounts each month, although your total payment remains equal each period.”
Source: How Amortization Works
Mortgage loans are amortized, meaning that at the beginning of the loan interest costs are at their highest. At first more of your payment goes toward interest than to the loan principal. As time goes on, more and more of each payment goes towards your principal and you pay proportionately less in interest each month. At the beginning of an amortized loan, a larger percentage of your payment goes towards interest. At the end, a larger percentage goes towards the principal balance.