1. What is Mortgage Balance Calculation?

The mortgage balance calculation determines how much principal remains on a loan after a certain number of payments. It accounts for both the interest and principal portions of each payment.

2. How Does the Calculator Work?

The calculator uses the mortgage balance formula:

Where:

• \( B \) — Remaining balance
• \( P \) — Original principal amount
• \( r \) — Monthly interest rate (annual rate ÷ 12)
• \( n \) — Total number of payments (term in months)
• \( p \) — Number of payments made

Explanation: The formula calculates how much of the principal remains after p payments, accounting for the amortization schedule.

3. Importance of Mortgage Balance Calculation

Details: Knowing your remaining balance helps with refinancing decisions, selling a property, or planning for early payoff. It's essential for financial planning and equity calculations.

4. Using the Calculator

Tips: Enter the original loan amount, monthly interest rate (as a decimal), total loan term in months, and number of payments already made. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: How do I convert annual rate to monthly?
A: Divide the annual percentage rate (APR) by 12 (months) and by 100 (to convert to decimal). For example, 6% APR = 0.06/12 = 0.005 monthly.

Q2: Why does early payment reduce balance faster?
A: Early payments are mostly interest. As balance decreases, more of each payment goes toward principal due to amortization.

Q3: Can I use this for extra payments?
A: This calculates standard payment schedules. For extra payments, you'd need a more complex amortization calculator.

Q4: What's the difference between balance and payoff amount?
A: Payoff amount may include accrued interest and fees, while this calculates only the remaining principal balance.

Q5: How accurate is this calculation?
A: It's mathematically precise for fixed-rate loans with consistent payments. Adjustable-rate mortgages would require different calculations.