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- Fixed Rate Mortgage
- A fixed rate mortgage has the same interest
rate and monthly payment throughout the term of the mortgage. The payment is
calculated to payoff the mortgage balance at the end of the term. The most
common terms are 15 year and 30 years.
- Interest Only Mortgage
- An Interest Only mortgage only requires
monthly interest payments. Since you are not paying any principal, this can
lower your monthly payment. However, since your mortgage's principal balance is
not decreased, you will have a balloon payment at the end of the mortgage's
term. Some an Interest Only mortgages will also be adjustable rate mortgages
(ARM). An Interest Only ARM will often have a period where the interest rate is
fixed, and then it is adjusted annually. This calculator assumes that the
interest rate for your Interest Only Mortgage remains fixed for the entire term.
- Mortgage amount
- Expected balance for your mortgage.
- Term in years
- The number of years over which you will repay this
mortgage. The most common mortgage terms are 15 years and 30 years. Please note
that for the Interest Only Mortgage you will have a balloon payment for the
entire principal balance at the end of the loan term.
- Interest rate
- Annual interest rate for each mortgage type.
- Prepayment
- A monthly prepayment of principal you would like to
apply to your Interest Only Mortgage balance.
- Monthly payment
- Monthly principal and interest payment (PI) for
the Fixed Rate Mortgage. This is an interest only payment for an Interest Only
ARM.
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