Guide to Mortgage Interest Calculation
Understanding your monthly fixed expenses is crucial when taking out a mortgage. This calculator is based on the **Fixed-Rate Amortization** method. This method ensures that your monthly payment remains constant, making it easier to manage your household budget.
Frequently Asked Questions (FAQ)
Q: How do I factor in Property Taxes or PMI?
A: This calculator focuses on the base Principal and Interest (P&I). You should manually add estimated taxes and Private Mortgage Insurance (PMI) to your total monthly cost.
Q: Fixed vs. Variable Rate?
A: Use this calculator to see how a 1-2% increase in rates would affect your monthly payment to ensure you can still afford the loan in the future.
Q: What is the maximum loan I can afford?
A: Generally, your total housing expenses should not exceed 28-36% of your gross monthly income (DTI ratio).