Shorewest Mortgage Calculator

July 1, 2024 by Ninja

 

 

 

 

About Shorewest Mortgage Calculator (Formula)

The Shorewest Mortgage Calculator computes the monthly payment for a mortgage based on the principal amount, annual interest rate, and loan term (in months) using the following formula:

Monthly Payment=P×r×(1+r)n(1+r)n−1\text{Monthly Payment} = \frac{P \times r \times (1 + r)^n}{(1 + r)^n – 1}Monthly Payment=(1+r)n−1P×r×(1+r)n​

Formula Breakdown

• Monthly Payment: Total monthly payment including principal and interest.
• P: Principal amount (total amount borrowed).
• r: Monthly interest rate, calculated as Annual Interest Rate12\frac{\text{Annual Interest Rate}}{12}12Annual Interest Rate​.
• n: Total number of monthly payments, calculated as the loan term in months.

Example Calculation

Suppose you have the following inputs:

• Principal (total amount borrowed): $250,000
• Annual Interest Rate: 4.5%
• Loan Term: 30 years (360 months)

First, convert the annual interest rate to a monthly rate: r=4.5%12=0.375%=0.00375r = \frac{4.5\%}{12} = 0.375\% = 0.00375r=124.5%​=0.375%=0.00375

Calculate the total number of monthly payments: $n=30\times 12=360$

Now, plug these values into the formula: Monthly Payment=250,000×0.00375×(1+0.00375)360(1+0.00375)360−1\text{Monthly Payment} = \frac{250,000 \times 0.00375 \times (1 + 0.00375)^{360}}{(1 + 0.00375)^{360} – 1}Monthly Payment=(1+0.00375)360−1250,000×0.00375×(1+0.00375)360​

After calculation, the monthly payment amount is determined, providing clarity on the financial obligation associated with the mortgage.

Understanding the Shorewest Mortgage Calculator formula empowers users to estimate and plan for monthly mortgage payments based on their specific financial details.