## Home Loan Amortization Calculator

This calculator will compute a mortgage's monthly payment amount based on the principal amount borrowed, the length of the loan and the annual interest rate. This calculator will also compute your total mortgage payment which will include your property tax, property insurance and PMI payments. Then, once you have computed the monthly payment, click on the "Create Amortization Schedule" button to create a report you can print out.

 Mortgage loan amount: Annual interest rate (APR): Mortgage loan term (# years): Annual real estate taxes: Annual homeowners insurance: Monthly PMI (Private Mortgage Insurance): Monthly Principal and Interest Payment: Monthly Taxes, Insurance and PMI payment: Total monthly mortgage payment:

## Demystifying Amortization

Amortization is a simply a verbose way of referring to the process of a loan's decrease over its lifetime. In the context of real estate mortgages, amortization (literally from the Greek “to die off or die down”) means the graduated lowering of the principal payment of the amount owed as the borrower makes principal and interest (P & I) payments, thereby reducing or “killing off” the total sum of the loan. When your loan goes through the process of amortization, it affects both the principal and the interest aspects of the borrowed figure as each month the total drops closer towards the end goal of zero when the loan is considered terminated.

In this calculator, you will plug in the figures relevant to your loan scenario, including total owed, APR, term, taxes and insurance, and receive a number representing your monthly expected payment. This grand total figure itself will be divided up into two sums: the lesser one is your taxes and insurance, while the larger one is the principal and interest on its own. For the sake of accounting and budgeting, you will want to consider the total of these two numbers as the amount of your income that you will actually be slicing out for your mortgage payment every month.

### Amortization by Example

Take, for example, a twenty year mortgage term wherein the borrower was taking out \$60,000 from the lender. At an annual interest rate of 5.5% and an annual real estate tax bracket of 4.5%, with two related private mortgage and homeowner's insurance payments at \$20 and \$25 per month, respectively, the total monthly payment due the consumer would be \$458.11. Principal and interest alone makes up the vast majority – \$412.73 – of this number, while the remaining taxes and insurance add on an additional \$45.38 to the monthly bill. Ideally, this figure of \$458.11 will not exceed more than 28% of your regular income, or else you may be a candidate for a refinanced loan with smaller payments over a longer period of time.