ToolStandards

Mortgage Calculator


Monthly Payment: $1,580.17


Total Interest Paid: $318,861.22

Understanding Mortgages

A mortgage is a loan used to buy a home or property. You borrow money from a lender—like a bank or credit union—and agree to repay it over time, usually with interest. The property serves as collateral, meaning if you don't make payments, the lender can take possession of it.

Details

Mortgages are long-term loans typically repaid over 15 to 30 years through monthly payments. These payments include both the principal (the original amount borrowed) and interest (the cost of borrowing). There are different types of mortgages:

Lenders assess factors such as your credit score, income, employment history, and debt-to-income ratio to determine your eligibility and interest rate. A higher credit score often leads to better loan terms.

Examples

Fixed-Rate Mortgage Example

You take out a $250,000 mortgage with a fixed interest rate of 4% over 30 years. Your monthly payment (excluding taxes and insurance) would remain about $1,193 for the life of the loan.

Adjustable-Rate Mortgage Example

You borrow $250,000 with a 5/1 ARM at an initial rate of 3% for the first five years. After that, the rate adjusts annually. If interest rates rise, your monthly payment could increase.

Other Helpful Info

Understanding the specifics of mortgages can help you make informed decisions when buying property. Always consider consulting with a financial advisor or mortgage professional to find the best loan option for your situation.