Calculate Mortgage Payments Formula, Calculate a Mortgage Monthly Payment
Calculate a Mortgage
Calculate Mortgage Payments Formula. How to calculate monthly mortgage payments and adjust for current mortgage refinance rates. Knowing this calculation at the back of your palm will be key as you purchase properties and negotiate real estate deals.
Monthly Mortgage Payment Formula
The formula to calculate a mortgage payment is as follows:
Monthly Payment = P * [ r / (1 – (1+r)^(-n))]
- P = Principal (Total Initial Loan Amount) – If you borrowed $800,000 to purchase a $1,000,000 house, your principal is $800,000
- r = Monthly Interest in decimal form (Annual interest / 12) – If your quoted annual interest rate is 6%, your monthly interest rate is 0.5%
- n = Number of months in loan amortization period – If this is a 30 year mortgage, your n = 30 * 12 = 360
Monthly Interest Payment Formula
Continuing from above, monthly interest payment = P * r (Principal multipled by monthly interest rate
Amount of Principal Paid Each Month Formula
Amount of Principal Paid = Monthly Mortgage Payment – Monthly Interest Payment
Here are some relevant topics that may interest you:
What refinancing is and why refinancing may be a good way to lock into a lower interest rate for your mortgage payments. When it would make sense to refinance your mortgage depending on current mortgage refinance rates.
Do not refinance simply because everyone else seems to be refinancing! Tips on when to refinance and the circumstances that make it ideal for refinancing.