About Mortgage Calculators
A mortgage calculator is a tool used to calculate the finances involved for real estate loans known as mortgages. Mortgages are loans offered by banks or creditors which are secured by holding the properties title until the loan is fully paid.
Most calculators use a formula to calculate the total interest, interest charged per period, principal paid per period and total payments made. This formula is known as an amortization formula where it sets a fixed repayment schedule over a set period. The information or variables needed to calculate an amortizing mortgage are loan amount, time in months, interest rate and compounding frequency (monthly, bi-weekly or weekly).
Mortgage calculators used by lenders also determine fee costs, APR value of mortgage, points, applicant risk and applicant affordability.
Formula used to Calculate Mortgage Particulars
(((i / 100) / f) * (1+((i / 100) / f))^n))]
Key:
i = interest
f = Periods per year (compounding frequency)
n = Length in months
A = Loan Amount
A finialized formula is available with each calculation on the results page, using your inputted variables.
History of Mortgages and Mortgage Calculators
Pre-1930's mortgages were paid over a short period (up to 10 years) and it wasn't until the 1930s the US government decided to step in and create departments to help the growing number of defaulted mortgages. The government decided to turn the non-amortizing mortgages into amortizing mortgages with a longer period term (20 years) with fixed payments of interest and principal [1].
After providing mortgages during this time the government created the federal housing administration, FDA to insure investors against defaulters. This security attracted investors to offer similar type mortgages to the public.
Our Calculator Uses
Private mortgage insurance can be calculated if a user chooses. This can be automatically calculated with an annual PMI cost or annual PMI percentage.
Property tax can be calculated into totals by frequency and lifetime of loan. Calculations are made by annual cost or percentage of purchase price.Property Insurance can be calculated into totals by frequency and lifetime of loan. Calculations are made by annual cost or percentage of purchase price.
Fees are one-off payments option lets the user add expenses or costs to total mortgage amount.
Home Owners Association Fees or HOA can be included if applicable and can be calculated by annual cost or annual percentage of purchase price.
Closing costs option lets the user add closings costs to mortgage amount.