1. What is a Mortgage Calculator?

Definition: This calculator estimates the monthly payment for a fixed-rate mortgage based on the loan amount, interest rate, and loan term.

Purpose: It helps homebuyers and real estate investors understand their potential mortgage payments before committing to a loan.

2. How Does the Calculator Work?

The calculator uses the standard mortgage formula:

Where:

• \( M \) — Monthly mortgage payment ($)
• \( P \) — Principal loan amount ($)
• \( r \) — Monthly interest rate (annual rate ÷ 12)
• \( n \) — Number of payments (loan term in years × 12)

Explanation: The formula calculates the fixed payment amount that will pay off the loan balance with interest over the loan term.

3. Importance of Mortgage Calculation

Details: Understanding your mortgage payment helps with budgeting and ensures you don't take on more house than you can afford (following Dave Ramsey's principles).

4. Using the Calculator

Tips: Enter the loan amount in dollars, annual interest rate (percentage), and loan term in years. All values must be > 0.

5. Frequently Asked Questions (FAQ)

Q1: Why does Dave Ramsey recommend 15-year mortgages?
A: Shorter terms mean less interest paid overall and faster equity building, aligning with his debt-avoidance philosophy.

Q2: What's a good interest rate for a mortgage?
A: Rates vary by market conditions, but historically 3-6% is considered good for fixed-rate mortgages.

Q3: Does this include taxes and insurance?
A: No, this calculates principal and interest only. Add ~1-3% of home value annually for taxes and insurance.

Q4: How much house can I afford?
A: Dave Ramsey recommends keeping payments ≤25% of take-home pay on a 15-year fixed-rate mortgage.

Q5: What's the benefit of making extra payments?
A: Extra payments reduce principal faster, saving thousands in interest and shortening the loan term.