Question 1

How do you calculate mortgage payments?

Accepted Answer

To calculate mortgage payments, use the formula M = P[r(1+r)^n]/[(1+r)^n-1], where P is your loan amount, r is your monthly interest rate (annual rate divided by 12), and n is your total number of payments (loan term in years multiplied by 12).

Question 2

Does my mortgage payment include taxes and insurance?

Accepted Answer

Not by default. The core mortgage formula only calculates principal and interest. Property taxes, homeowners insurance, PMI, and HOA fees are added separately and can significantly increase your total monthly payment.

Question 3

How much does a 1% rate difference change my monthly payment?

Accepted Answer

On a $320,000 loan, moving from 6.7% to 7.7% increases the monthly principal and interest payment by roughly $220 to $230. Even small rate differences add up substantially over a 30-year term.

Question 4

What's the difference between a 15-year and 30-year payment calculation?

Accepted Answer

A 15-year loan has a higher monthly payment but significantly less total interest paid over the life of the loan. A 30-year loan lowers the monthly payment but roughly doubles total interest paid over the loan's term.

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