The Mortgage Reports

"Can you run payments for me?"

It's one of the most common questions that my home-buying clients ask me.  They find a home in, say, Montgomery and want to know what their monthly mortgage payment look like.

Some loan officers find it tedious to calculate mortgage payments, but I happen to enjoy it.  See, I know that despite there being 20 million other places to look for payment information, my clients choose to call me. 

It's what I'm here for, after all, and my clients know that I'm going to make the homebuying process as simple as possible for them.  Doing the math is just one way I do it.

Then, when the math is done, I'll usually send over a few Microsoft Excel formulas as a follow-up.  Sometimes, when my clients have questions at odd hours and I'm not around, it comes in handy.

1. How to calculate the monthly mortgage payment on a P+I loan
2. How to calculate the monthly mortgage payment on an Interest Only loan
3. How to calculate the monthly principal paid to the mortgage
4. How to calculate the annual principal paid to the mortgage

The four screenshots below show these formulas in action.  The part that begins with is what goes into the Excel formula bar.  You are welcome to copy these for your own use.

Calculate Principal + Interest Payments

A principal + interest mortgage is the most common type of home loan. 

Some people refer to it as a "regular" mortgage which implies that anything else is an "irregular" mortgage. 

That implication is false.  A more accurate description of a principal + interest mortgage would be to call it a "bank-amortizing home loan" because the bank sets the payment schedule from Day 1 until its paid off.

---

Calculate Interest Only Payments

Interest only home loans are the "other" mortgage repayment choice. 

Instead of being told how much principal to repay each month by the lender, mortgage holders can pay as much (or as little) principal as they want, month after month.  This is why mortgage with interest only options are better characterized as "self-amortizing home loans".

Interest only home loans can be a terrific financial planning when managed properly.

---

Calculate Monthly Principal Paid

The amount of principal included in a principal + interest mortgage payment increases as a home loan moves towards maturity.

The first bunch of years in a mortgage repayment schedule are loaded with interest. 

It's not until sometime in Year 18 that a monthly mortgage payment includes more principal than interest.

---

Calculate Annual Interest Paid

Each year, the cumulative amount of principal paid on a principal + interest home loan reduces the amount owed to the bank.

This figure will grow with each anniversary.

---

If you'd like extra help with the formulas or want my help for your own home loan, anytime.

Share on Facebook

---

Dan Green is an active loan officer. Reach Dan via email at or call toll-free to 877-DAN-GREEN.