# Mortgage Calculators: Using an Amortization Calculator

**If you're considering getting a new mortgage, or refinancing your existing mortgage, mortgage calculators can help you decide which lending options can help you achieve your financial goals. Free mortgage calculators are widely available on websites operated by lenders and government sponsored enterprises such as Fannie Mae and Freddie Mac. An amortization calculator can help you understand how each installment of principle and interest (P& I) is applied first to interest owed and then your mortgage balance (principle). Additionally, an amortization schedule is useful if you're choosing among mortgage loans with different terms.**

### How a Mortgage Term Affects Amortization

Although the 30 year fixed rate mortgage may no longer be the top choice of many homebuyers, refinancing to a fixed rate mortgage can eliminate the instability of negative amortization and interest only payment options. One aspect of mortgage loans that many people don't consider is how much interest is paid over the life of a thirty year mortgage loan. Consider how using mortgage calculators can help you save money and pay off your mortgage sooner. For example, you're refinancing to a fixed rate mortgage of $275,000 at 6.50%. You've qualified for either a 30 year fixed rate mortgage or a 15 year fixed rate mortgage. Which should you choose?The 30 year option requires 359 P&I payments of $1,739.19 and one payment of $1,738.16 for a total of $625,748.37! However, a 15 year mortgage of the same amount and interest rate requires 179 payments of $2,395.55 and one payment $2,395.51 for a total of $431,398.97. This represents a savings of $194,349.40. The savings you could realize by choosing a 15 year loan could be saved for retirement, or used for investments. You can use an amortization calculator to view amortization schedules and P&I payments for various mortgage amounts, rates, and terms.

**Sources:**

Fannie Mae

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