Mortgage Calculators – Essential for Financial Planning

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Mortgage Calculators – Essential for Financial Planning

Mortgage calculators enable us to measure how changes in mortgage terms will impact our future financial outlook. They form an essential tool during the mortgage process, helping homebuyers identify the best terms for their mortgage. Lets get familiar with them.

Key factors in mortgage calculations include:

  • Mortgage Principal
  • Loan Balance
  • Compound Interest Rate
  • Number of Payments per Year
  • Total Number of Payments; and
  • Regular payment amount

STEM Lending Mortgage Calculators

We at STEM Lending offer a number of mortgage calculators for your ready use. Check these:

Further advanced mortgage calculators incorporate other costs associated with a mortgage, including insurance and such as local/state taxes.

Fixed Rate Mortgage Calculators

Monthly payments for a fixed rate mortgage are the amount paid by the borrower every month that ensures that the loan is paid off in full with interest at the end of its term.¹With a fixed rate mortgage, the borrower agrees to pay off the loan completely at the end of the loan’s term, so the amount owed at month N must be zero. The monthly payment formula is based on the annuity formula, depending on:

  • The monthly interest rate, expressed as a decimal, not a percentage. Since the quoted yearly percentage rate is not a compounded rate, the monthly percentage rate is simply the yearly percentage rate divided by 12; dividing the monthly percentage rate by 100 gives r, the monthly rate expressed as a decimal.
  • The number of monthly payments, called the loan’s term, and
  • The amount borrowed, known as the loan’s principal.

The fraction of the monthly payment that is applied to principal pay down equals the amount of payment minus the amount of interest currently paid on the pre-existing unpaid principal.¹

The interest component of the monthly payment, is the interest rate times the amount unpaid at the end of month. Since in the early years of the mortgage the unpaid principal is still large, so are the interest payments on it. The portion of the monthly payment going toward paying down the principal is very small and equity in the property accumulates very slowly (in the absence of changes in the market value of the property). But in the later years of the mortgage, when the principal has already been substantially paid down and not much monthly interest needs to be paid, most of the monthly payment goes toward repayment of the principal, and the remaining principal declines rapidly.

The borrower’s equity in the property equals the current market value of the property minus the amount owed.

Adjustable Rate Mortgage Calculators

Annual percentage rates (APR) calculations for Adjustable Rate Mortgages (ARMs) require many more variables, including: the starting interest rate; the length of time at that rate; the recast; the payment change; the index; the margins; the periodic interest change cap; the payment cap; lifetime cap; the negative amortization cap; and others.¹

In the forthcoming STEM Lending blog posts, we will dive deeper into these steps and the gotchas that you need to watch out for. Please feel free to reach out to or contact us via if you have any questions.

Wishing you a happy home buying experience!

– STEM Lending Team


  1. Mortgage Calculator
  2. Payment / Amortization Calculator: Showing your monthly payment for fixed rate or adjustable rate loans.
  3. Rent vs. Own Calculator: Comparing the estimated costs of buying vs. renting a home.
  4. Annual Percentage Rate (APR) Calculator: Calculating the annual percentage rate for a loan.
  5. Debt Consolidation Calculator: Calculating the effect of combining other debt with your home mortgage.
  6. Prepayment Savings Calculator: Estimating how additional mortgage payments reduces your interest costs.
  7. Early Payoff Calculator: Computing the additional payment required to pay off your loan early.
  8. Refinance Break-Even Point Calculator: Calculating the number of months to break-even if you refinance.
  9. Tax Savings Calculator: Estimating your early tax savings resulting from property.