Mortgage Calculator

About the Mortgage Calculator

The Mortgage Calculator helps you figure out how much you’ll pay each month for a house loan. It also adds in other costs, like property taxes or insurance, that come with owning a home. You can even see how things might change if you make extra payments or if certain costs go up each year. This calculator is especially useful for people in the U.S.

What is a Mortgage?

A mortgage is a type of loan that helps you buy a house. When you borrow money to buy a house, the bank or lender gives you the money. You then pay them back a little bit every month, usually for 15 to 30 years. Your monthly payment is split into two parts: the amount you borrowed (called the principal) and the extra money you pay for borrowing (called interest).

Sometimes, your payment will also include costs like property taxes and home insurance. You won't fully own the house until you’ve paid off the entire mortgage loan.

Key Parts of a Mortgage

• Loan Amount: This is the total amount of money you borrow from the bank to buy the house. It’s usually the price of the house minus your down payment.
• Down Payment: This is the money you pay upfront to help reduce how much you borrow. Typically, people put 20% down, but sometimes you can put down less. If you put down less than 20%, you might have to pay extra insurance called PMI.
• Loan Term: This is the time you have to pay back the loan. Most mortgages are for 15, 20, or 30 years. If you pick a shorter term, you may pay less interest over time.
• Interest Rate: This is the percentage the bank charges you for borrowing money. There are two types: fixed-rate (where the rate stays the same) and adjustable-rate (where the rate can change after some time).

Costs of Owning a Home

When you own a home, you pay more than just your mortgage. There are two types of costs to think about:

Recurring Costs

These are costs you have to pay every year or month, like:

• Property Taxes: Money you pay to the government every year based on the value of your property.
• Home Insurance: This protects your home from accidents or damage. It also covers you in case someone gets hurt at your home.
• Private Mortgage Insurance (PMI): If you put down less than 20% of the home price, you may need this insurance.
• HOA Fees: If you live in a community with a Homeowners Association (HOA), you may pay fees for them to maintain the neighborhood.

Non-Recurring Costs

These are one-time costs that happen when you buy a house, like:

• Closing Costs: Fees you pay when you finish buying the house. These can include things like lawyer fees, title fees, and inspection fees.
• Renovations: Sometimes you might want to fix or change parts of your new house, like painting walls or putting in new floors.
• Moving Costs: The money it costs to move your stuff into your new home.

Paying Off Your Mortgage Early

Some people want to pay off their mortgage faster. Here are three ways you can do that:

• Extra Payments: Pay a little more each month or make extra payments whenever you can. This helps you pay off the loan quicker and saves you money on interest.
• Biweekly Payments: Instead of paying once a month, pay half of your payment every two weeks. This adds up to one extra payment each year, which can help you pay off your mortgage faster.
• Refinancing: This means getting a new loan to pay off your old one, often with a lower interest rate or shorter term.

Benefits of Paying Early

There are some great reasons to pay off your mortgage early:

• Save Money: You’ll pay less in interest.
• Own Your Home Faster: You’ll be debt-free sooner!
• Feel Good: It feels awesome to own your home without owing anyone money!

Things to Keep in Mind Before Paying Early

But there are also some things to think about before paying early:

• Prepayment Penalties: Some loans charge a fee if you pay off the loan too early.
• Opportunity Cost: If you pay off your mortgage early, you might miss out on investing that money in something that could make you more money.
• Locked Money: Money you put into your home can’t be spent on other things. If you need cash quickly, it might be hard to get it.

History of Mortgages

In the past, it was really hard for people to buy homes. They needed to save a lot of money for a big down payment. But after the Great Depression, the government created programs to help people get mortgages more easily. This made it easier for people to buy homes and pay for them over time.

Today, mortgages are common in the U.S., and many people use them to own homes. The government continues to help make sure homeownership is affordable for most people.