1. What is Mortgage Interest?

The total interest paid on a mortgage represents the additional cost of borrowing money to purchase a home, beyond the original loan amount (principal). Understanding this helps borrowers evaluate loan options and make informed financial decisions.

2. How Does the Calculator Work?

The calculator uses the mortgage interest formula:

Where:

• \( PMT \) — Monthly mortgage payment (USD)
• \( n \) — Total number of payments (months)
• \( PV \) — Principal loan amount (USD)

Explanation: The formula calculates the difference between all payments made over the loan term and the original principal amount.

3. Importance of Interest Calculation

Details: Knowing total interest helps borrowers understand the true cost of their mortgage, compare loan options, and evaluate the benefits of making additional principal payments.

4. Using the Calculator

Tips: Enter your monthly payment amount, total loan term in months, and original loan amount. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Why is my total interest higher than my principal?
A: This is common with long-term loans (like 30-year mortgages) because interest accumulates over many years.

Q2: How can I reduce total interest paid?
A: Make extra principal payments, choose a shorter loan term, or refinance to a lower interest rate when possible.

Q3: Does this include property taxes and insurance?
A: No, this calculation only considers principal and interest. Your actual payment may include escrow items.

Q4: What's the difference between interest and APR?
A: APR includes interest plus other loan costs, while this calculation shows just the interest portion.

Q5: How accurate is this calculation?
A: This assumes fixed-rate payments. Adjustable-rate mortgages would require more complex calculations.