This calculator computes the payments (principal and interest) for a fixed rate mortgage, using monthly interest compounding and monthly payments. A fixed rate mortgage (FRM) is a mortgage loan where the interest rate on the note (or contract to pay) remains the same through the term of the loan. This is in contrast to adjustable loans where the interest rate may adjust or "float."
Be sure to look at the payment schedule...
You'll need to check the "Show payment schedule" box and hit "Calculate" to see it. The payment schedule breaks your payment into principle and interest amounts. Notice how the payment stays fixed but the interest portion gradually reduces over the life of the loan. This affects your taxes if you deduct interest on your residence. Also note how the amount of your payment allocated to principle increases over the life of the loan. This pays down the balance of the loan.
Check out the Financial Details...
The bold answer is nice, but the table below it lists the details.
Tips for the astute...
Your payment amount includes principal and interest. It does not include property tax, association dues, private mortgage insurance, and other insurance or costs. These other bills can really add up. Be sure to read your loan documents, insurance documents, and tax documents. Some insurance you pay for yourself (e.g., homeowners insurance). Other insurance you pay on behalf of the bank (e.g., PMI or private mortgage insurance). PMI usually comes into play when you put less than 20% down on a home. Some banks require that all these costs be held in escrow (or impound). This satisfies the bank that everyone is paid on time, that your home is insured, and that taxes aren't overdue.
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