How Do You Understand How Mortgage Calculators Work?
You can find free mortgage calculators on the Internet pretty easily. This article discusses how those calculators work. Find your interest rate. Bankrate.com is a good source for the current market rates, or you can get quotes from mortgage lenders. For this example, I will use 6% (which is 0.06 as a decimal). Divide this number by 12. 6%/12 = 0.06/12 = 0.005 (or 0.5%) Add 1 to this number. (.005 + 1 = 1.005) Determine the number of months you want for your mortgage. If you are looking at a 30 year mortgage, then you will want your morgage for (30 * 12 = ) 360 months. 1.005 ^ 360 = 6.02257521 Divide one by this number. 1/6.02257521 = 0.166 Subtract this number from one. 1 – 0.166 = 0.834 Divide this number by the number you found in step 2 (the interest rate divided by 12). 0.834 / 0.005 = 166.792 Finally, divide the amount of the mortgage by this amount. So, let’s assume you are buying a home worth $200,000. You put $40,000 as a down payment. Your mortgage is worth ($200,000 – $40,00
