Amortization Calculators: How do Rates Affect Payments?

By Geoff Walker
Calculators for Mortgages Columnist

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Mortgages are different from other purchases. They are larger, run for a longer term, and are more complex. Despite all that, it is important to remember that you are the customer and mortgage companies want to compete for your business. You should shop around for the best deal, the most favorable terms, and the lowest interest rate. A mortgage payment calculator (or amortization calculator) is an indispensable and convenient way of checking the effect of the different mortgage deals mortgage companies will offer you. Using an amortization calculator, you can compute your monthly mortgage payments; all you have to do is input some basic data

Mortgage Amortization Calculator: What Data Do I Need?

 There are three main figures you need to run a mortgage payment calculator:

• The Total Loan Amount you want mortgage companies to lend you
• The Loan Term or period of time over which you will repay the loan
• The Interest Rate charged on the loan

Enter those figures and your monthly mortgage payment is calculated instantly. It just couldn't be easier!

Now you can start using the amortization calculator to answer some 'what-if' questions. Good examples are

• What happens if I borrow less or more?
• What happens if I find a lower interest rate?
• How will my monthly repayment be affected if I take a shorter or longer mortgage term?

The ability to answer these questions can help you make a wise and better-informed decision about borrowing.

If you know the annual figures for property taxes, insurance, or other dues, enter the annual figure and the amortization calculator will show you both your monthly mortgage repayment and the monthly amount that includes these other costs. This enables you to keep tabs on the true cost of your home purchase.



About the Author
A freelance writer with degrees in arts and commerce, Geoff Walker has experience in corporate financial management, mortgages, and fund-raising.