While a lender will quote you mortgage payments before you close a loan, it's a smart idea to determine the estimated payment amount on your own before you even decide on a lender. You can use a simple calculator available online or a popular spreadsheet program to calculate your total payments as well as a break down of the interest you'll be paying to the creditor.
Use the amortization schedule calculator (see Resources) to calculate mortgage payments and interest for your proposed loan. Simply enter the terms, including amount you want to borrow, interest rate and loan terms. Then select "Yes" to display a full amortization schedule. The tool displays your mortgage payment in blue, and then a listing of the interest charges for each month in a table. At the very end of the table view the "Final Summary" table, which lists your total interest paid.
Determine the amount of money you'll spend per month on your mortgage by plugging numbers into the Mortgage Calc website's tool (see Resources). After entering your loan information, click "Calculate" to display the payment on the same screen. If you want to view the interest charge, click "Amortize" instead, which brings up a new window listing the amount of interest you'll pay each year until the loan is paid off.
Calculate mortgage payments using a Microsoft Excel worksheet as an alternative to an online calculator. Excel allows you to enter formulas to calculate your mortgage payment and total interest automatically and also format the sheet so that it acts as your own personal mortgage calculator. If you use this option, you should have advanced experience with Excel formulas and knowledge of the basics of calculating mortgage interest. In short, you must create a formula to divide the interest rate on the loan by 12 to get the monthly rate then multiply that result by the balance to get the interest charge for each month. The formula for a mortgage payment to use in Excel is "= P [i(1 + i)^n] / [(1 + i)^n - 1]" where "P" is the principal, "i" is the monthly rate, "r" is the yearly interest rate and "n" is the term of the loan in months.
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