Calculate Mortgage Remaining Balance

Mortgage Balance Formula:

\[ B = P \times \frac{(1 + r)^n - (1 + r)^p}{(1 + r)^n - 1} \]

Principal (P):

Monthly Interest Rate (r):

decimal

Total Months (n):

months

Months Paid (p):

months

Remaining Mortgage Balance (B):

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1. What is the Mortgage Balance Formula?

The mortgage balance formula calculates the remaining principal on a loan after a certain number of payments have been made. It accounts for the compounding interest over time and the principal paid down through regular payments.

2. How Does the Calculator Work?

The calculator uses the mortgage balance formula:

\[ B = P \times \frac{(1 + r)^n - (1 + r)^p}{(1 + r)^n - 1} \]

Where:

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

Explanation: The formula calculates how much of the original principal remains after accounting for the payments made and the interest accrued.

3. Importance of Mortgage Balance Calculation

Details: Knowing your remaining mortgage balance is crucial for refinancing decisions, home equity calculations, and financial planning. It helps homeowners understand how much they still owe and how much principal they've paid down.

4. Using the Calculator

Tips: Enter the original loan amount (principal), monthly interest rate (annual rate divided by 12), total loan term in months, and number of payments already made. Ensure all values are positive and that months paid doesn't exceed total months.

5. Frequently Asked Questions (FAQ)

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

Q2: Does this include taxes and insurance?
A: No, this calculates only the principal balance. Your total monthly payment may include escrow for taxes and insurance.

Q3: Why does my balance decrease slowly at first?
A: Early in a mortgage, most of your payment goes toward interest rather than principal due to amortization.

Q4: How accurate is this calculation?
A: It's mathematically precise for fixed-rate loans. For adjustable-rate mortgages, it's accurate until the next rate adjustment.

Q5: Can I use this for other loans?
A: Yes, it works for any amortizing loan with fixed payments (car loans, personal loans, etc.).