Want to calculate your own mortgage payment, or double check the mortgage payment that your loan officer or real estate agent has told you yours would be? Maybe you are sitting around the breakfast table Sunday morning looking at Homes For Sale in the Newspaper, or surfing your favorite real estate website online and want to do a handy mortgage calculation.
What if you do not have access to a computer and can't get to a mortgage calculator online? You can calculate your mortgage payment using the mortgage formula found in this article.
Need To Know Mortgage Loan Amount, Interest Rate, Years Of Mortgage
You will also need to know your approximate interest rate - or pick one that see on the internet, the sales price of the home minus your down payment to get your mortgage amount, and the length of your mortgage - 30 years or 15 years for example to make your payment calculations.
Below you will see how to calculate a mortgage payment with just a simple scientific calculator. The math is not that hard so follow along with your numbers and you'll quickly arrive at what your mortgage payment will be.
One thing you will want to do is use as many numbers to the right of the decimal point as your calculator gives you. If you can change your calculator setting to give you more numbers, or decimals, then you'll want to do it. The less numbers you get, the less accurate your mortgage payment calculation will be.
Calculate A Mortgage Payment With This Equation
M = P [ i(1 + i)n ] / [ (1 +i)n - 1]
M = Monthly Mortgage Payment
P = Mortgage Amount - this is the amount of your mortgage - for example $200,000
i = Monthly Interest Rate. To calculate this take the interest rate you were quoted (ex. 6.375%) and divide it by 100. Then divide that number by 12. You should get a very small number. For example: 6.375% / 100 = .06375. Now divide .06375 by 12 to get .00531. .00531 equals i for this example.
n = Number of Monthly Payments in your mortgage. For a typical 30 year mortgage there are 360 payments. To get this take 30 years and multiply by 12 months to get 360 payments.
Let's calculate a mortgage payment now using our equation and numbers from the example
Let's start with the first bracket: [ i(1 + i)n ]
- First plug in our numbers from the above example to get this:
[.00531(1 + .00531)360 ] = 6.729781, then multiply by .00531 to get: .00357351
- Now the second bracket: [ (1 +i)n - 1]
Now plug in our numbers again: [ (1 +.00531)360 - 1] to get: 5.729781
- And finally, putting it all together: P [ i(1 + i)n ] / [ (1 +i)n - 1]
Monthly Payment = $200,000 x (.00357351 / 5.729781) to get: $1,247.35 in Principal and Interest.
Calculating your mortgage payment is not hard to do if you cannot get to an online mortgage calculator. If you are calculating this with a hand held calculator you will need one that has a button for exponents. You will plug in your number of mortgage payments in months using this button.
Add Monthly Real Estate Taxes And Insurance Payments for PITI
It is also very easy to make changes to calculate your monthly payment based on different interest rates, loan amounts, and length of mortgage. One thing you want to make sure you remember to do is to add in the annual taxes and home insurance premiums that you will also be paying after you have adjusted them per month.
To do this, just take the annual amount of each of these figures and divide them by 12. Adding these to the mortgage payment you just calculated will give you your complete mortgage payment which real estate agents and loans officers commonly call: PITI - Principal, Interest, Taxes and Insurance.
Good luck calculating your mortgage payment, and if you have any questions please feel free to ask EdGAR for more information.
