Mortgage Calculator

A mortgage is a loan used to finance the purchase of real estate. The borrower makes regular payments over a set period of time, usually 15 or 30 years, to pay back the amount borrowed plus interest. The property serves as collateral for the loan, meaning if the borrower stops making payments, the lender can seize the property.

The key components of a mortgage are:

• Loan Amount: The amount being borrowed to purchase the property. This is often the purchase price minus any down payment.
• Down Payment: An upfront payment made by the borrower, usually 10-20% of the purchase price. This reduces the amount that needs to be borrowed.
• Loan Term: The length of time over which the loan will be repaid, such as 15 or 30 years. Longer terms mean lower monthly payments but higher interest costs over time.
• Interest Rate: The percentage rate charged on the loan amount. This is typically fixed for the life of the loan for most mortgages.
• Monthly Payments: The regularly scheduled payments made by the borrower to repay principal and interest. This is calculated based on the loan amount, interest rate, and loan term.

Mortgages allow buyers to finance real estate purchases they could not afford upfront. The lender profits from the interest while the borrower builds home equity as the loan balance decreases over time.