1. What is the Mortgage Payment Formula?

The mortgage payment formula calculates the periodic payment amount for a personal promissory note based on the principal amount, interest rate per period, and total number of payment periods.

2. How Does the Calculator Work?

The calculator uses the mortgage payment formula:

Where:

• \( Mortgage \) — Principal loan amount (USD)
• \( r \) — Interest rate per period (decimal)
• \( n \) — Total number of payment periods

Explanation: The formula accounts for both principal repayment and interest charges over the life of the loan.

3. Importance of Payment Calculation

Details: Accurate payment calculation is crucial for financial planning, budgeting, and ensuring the promissory note terms are fair and manageable.

4. Using the Calculator

Tips: Enter the mortgage amount in USD, interest rate as a decimal (e.g., 0.05 for 5%), and number of payment periods. All values must be positive.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between annual and periodic rate?
A: If payments are monthly, divide annual rate by 12. For quarterly payments, divide by 4. The calculator uses rate per payment period.

Q2: Does this include taxes and insurance?
A: No, this calculates only principal and interest payments for the promissory note.

Q3: What if I want to make extra payments?
A: Extra payments reduce principal faster and shorten loan term. This calculator shows the base payment amount only.

Q4: How accurate is this calculation?
A: It's mathematically precise for fixed-rate loans with consistent payment amounts.

Q5: Can this be used for adjustable rate mortgages?
A: Only for fixed-rate periods. ARM payments change when rates adjust.