Loan & Mortgage Estimator
A professional utility for calculating payments and visualizing the long-term cost of interest compounding.
How the Math Works
Lenders use the Standard Annuity Formula to ensure they collect profit at the start of the loan. This front-loading of interest means you build equity very slowly during the first 5-10 years.
*Where M is payment, P is principal, i is monthly interest, and n is total months.
The Accelerated Strategy
By making just one extra principal payment per year, you can typically shave 4-6 years off a 30-year mortgage.
"Paying an additional $100 per month toward your principal can save you tens of thousands of dollars in long-term interest costs."
PMI and Escrow
If your down payment is less than 20%, you may be required to pay Private Mortgage Insurance (PMI). Additionally, your actual monthly check will likely include property taxes and homeowners insurance (Escrow), which are not included in this basic principal and interest calculation.