Calculate Monthly Mortgage Payments

To calculate monthly mortgage payments, there are two options. The trusty mortgage calculator is the easiest option. The second option is to calculate the payments using pencil, paper and some mathematical formulas.

Understanding Amortization Tables

The mortgage payment consists of:

• Principal
• Interest
• Taxes
• Insurance

Of these factors, the taxes and insurance will be estimated, so don't expect an exact figure. Referred to altogether as PITI, the calculation should give you a firm idea of what your overall payment will be each month. Remember that taxes and insurance may change as time goes by. If the lender gives you the option of paying your own taxes and insurance, then these will not be calculated in the mortgage payment because it will consist of P&I only. Also, if you have an interest-only loan, you will pay only interest for a certain period of time before the principal payments kick in.

The factors you will need in order to calculate monthly mortgage payments include:

• The loan amount, which is the purchase price minus your down payment
• The interest rate
• The years the loan will be amortized for
• The market value of your home, if refinancing
• The total amount of other debt included in the loan, if it is a cash-out refinance

Other factors you may need for mortgage calculations are the zip code of your potential property (to estimate insurance and tax), your gross income and your total monthly debts.

To use the mortgage calculator, simply plug in your numbers as prompted. There are some calculators which will also estimate your insurance and tax based on your area's averages. These are good to give you a ballpark figure to expect, however, they won't reflect your exact payment. Still others will help you decide between points or a down payment. There are specific calculators created for refinances, balloon mortgage calculations, adjustable rate mortgages and a cash-out refinance. You'll find a link to all of these types below.

1. Bank Rate
2. Mortgage Calculator.org
3. Mortgage X.com
4. Interest.com

Interest.com offers a variety of calculators, including:

• Interest only
• Refinance
• Balloon mortgage
• Cash out refinance
• Adjustable rate
• Points or down payment comparison

Another option to figure your monthly mortgage payment is to use a fixed rate mortgage table. These are already calculated using set loan amounts, interest rates and years of amortization. Here is a list of fixed rate mortgage tables you can use.

Bankrate.com offers amortization schedules for 10- to 30-year mortgages, for fixed, fixed refinances, FHA, FHA refinances, ARM and ARM refinances. These are shown at various fixed and adjustable interest rates so you can compare the different payments over time. Bankrate also has a calculator to show you how it will affect your loan amortization if you pay extra payments, or pay bi-weekly payments. These calculations are a real eye opener as it can save you thousands of dollars in interest payments and allow you to pay off your loan earlier. The typical amortization schedule shows you only the payment and interest if paid once per month, on time, for the life of the loan.

Microsoft offers templates for its Excel spreadsheet program to help you amortize your loan. You can download them free to your computer. They also offer templates for loan calculators to help you figure mortgage payments.

With your ballpark mortgage payment figure in hand, you will have a better idea of how much house you can afford as you start your search. Getting pre-approved by your mortgage company or banker is a valuable asset since it may prevent you from being disappointed later on. You will know exactly where you stand, and how big a loan you can qualify for, before you start looking for your home. Your debt to income ratio will factor heavily in the loan amount you qualify for.

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