If you are uncertian about how much you might be able to borrow, at which interest rate, and so on, a more versatile calculator can be found at: payment calculator. † Once you have everything figured out, be sure and come back here.

This calculator's purpose is to illustrate how your mortgage payment gets distributed. (How much goes to interest, equity, etc). Banks print amortization schedules which don't have "running totals". The amounts are printed for each month and so a 15 year amortization schedule has 180 lines; a 30 year one has 360! With a document like that, it is hard to see the "big picture".

However, if you still want a monthly display, please go to: Monthly Display

Example

Amount: $150,000
Years: 40
Rate: 7.625%.

• Entering these figures, we see the monthly payment is $1,000.99.
• The column titled "you own", is the plain English term for "equity".
• Now look at the 20 year line - halfway through the loan - you'd think you'd own half of your house ? No - far from it actually!

In those 20 years you have paid $240,237.71 (the interest portion of this is a whopping $213,322.36) and so "you actually own" (OR your equity) is $26,915.35.

After all that time and money you own roughly 18% of your house !

Also, when the final payment is made, you have spent $480,475.43 to buy a $150,000 house!

If the length of the mortgage is changed to 30 years we get a monthly payment of $1,061.69.

The loan is 10 years (or 25%) shorter yet the monthly payment increases by only about 6% or $60.70.

After the final payment, you have spent $382,208.62 to buy the $150,000 house.

Compare this to the 40 year mortgage example. Although 40 year mortgages aren't too common, you can see that they should be avoided because the 30 year mortgage has all the advantages.

After 15 years (the halfway point) your equity is $36,344.43, about 24% of the house. As you can see, equity increases very slowly in the first 2/3 of the time of the loan.

...more to be added later.