How to Calculate Mortgage Interest
Use an online mortgage loan calculator., Calculate total interest using loan payments.
Step-by-Step Guide
-
Step 1: Use an online mortgage loan calculator.
There is a variety of online calculators that will find your monthly payment and interest paid with the simple input of a few pieces of key information.
Try searching for "mortgage loan calculator" using your preferred search engine.
Usually, you'll have to input details of your loan, like the number of years, annual interest rate, and value of your principal.
Then, simply hit "calculate" and the provided readout should tell you anything else you need to know.This can also be a useful way to compare mortgage plans.
For example, you may be deciding between a 15-year loan at 6 percent or a 30-year loan at 4 percent.
The calculator will help you easily see that, despite the higher interest rate, the 15-year loan is a cheaper option.
Keep in mind that online calculators often advertise rates that are much lower than what you can actually get.
Therefore, it is best to get rates from an actual lender rather than relying on online mortgage calculators. -
Step 2: Calculate total interest using loan payments.
Similar to the quick method above, this one will allow you to calculate the total interest you will pay on your loans, assuming you already know your monthly payment.
However, here you will be multiplying your monthly payment by the number of payments to arrive at a total amount paid over the life of the loan.
Start by finding your monthly payments either on a recent bill or on your loan agreement.
Then, multiply your monthly payment by your number of payments.
Subtract your principal from the total of your payments.
This number will represent the total amount you will pay in interest over the life of your loan.
For example, imagine you are paying $1,250 per month on a 15-year, $180,000 loan.
Multiply $1,250 by your number of payments, 180 (12 payments per year*15 years), to get $225,000.
Your total interest paid would then be $225,000
- $180,000, or $45,000.
Detailed Guide
There is a variety of online calculators that will find your monthly payment and interest paid with the simple input of a few pieces of key information.
Try searching for "mortgage loan calculator" using your preferred search engine.
Usually, you'll have to input details of your loan, like the number of years, annual interest rate, and value of your principal.
Then, simply hit "calculate" and the provided readout should tell you anything else you need to know.This can also be a useful way to compare mortgage plans.
For example, you may be deciding between a 15-year loan at 6 percent or a 30-year loan at 4 percent.
The calculator will help you easily see that, despite the higher interest rate, the 15-year loan is a cheaper option.
Keep in mind that online calculators often advertise rates that are much lower than what you can actually get.
Therefore, it is best to get rates from an actual lender rather than relying on online mortgage calculators.
Similar to the quick method above, this one will allow you to calculate the total interest you will pay on your loans, assuming you already know your monthly payment.
However, here you will be multiplying your monthly payment by the number of payments to arrive at a total amount paid over the life of the loan.
Start by finding your monthly payments either on a recent bill or on your loan agreement.
Then, multiply your monthly payment by your number of payments.
Subtract your principal from the total of your payments.
This number will represent the total amount you will pay in interest over the life of your loan.
For example, imagine you are paying $1,250 per month on a 15-year, $180,000 loan.
Multiply $1,250 by your number of payments, 180 (12 payments per year*15 years), to get $225,000.
Your total interest paid would then be $225,000
- $180,000, or $45,000.
About the Author
Samuel Burns
Enthusiastic about teaching lifestyle techniques through clear, step-by-step guides.
Rate This Guide
How helpful was this guide? Click to rate: