Mortgage Calculator

A mortgage is a loan secured by real estate property. The lender helps the buyer pay the seller of a house, and the buyer agrees to repay the money borrowed over a period of time, usually 15 or 30 years in the U.S. Each month, a payment is made from buyer to lender. A portion of the monthly payment is called the principal, which is the original amount borrowed. The other portion is the interest, which is the cost paid to the lender for using the money.

Key components include the loan amount (purchase price minus down payment), down payment (typically 20% or more to avoid PMI), loan term (most commonly 15, 20, or 30 years), and interest rate (fixed or adjustable). Recurring costs beyond the mortgage payment include property taxes, home insurance, private mortgage insurance (PMI) when the down payment is less than 20%, and HOA fees.

Making extra payments, switching to biweekly payments, or refinancing to a shorter term can all help pay off a mortgage faster and save on interest. However, borrowers should consider prepayment penalties, opportunity costs, and the loss of tax deductions before paying ahead.