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Your monthly mortgage payment is calculated using this formula: M = P × r(1+r)^n / ((1+r)^n − 1), where P is the loan principal, r is the monthly interest rate (annual rate ÷ 12), and n is the number of payments (years × 12).
Example: A $300,000 loan at 6.5% for 30 years → monthly rate = 0.065/12 = 0.005417, n = 360 payments → monthly payment = $1,896. Total paid = $682,560. Total interest = $382,560 — more than the original loan.
The difference between a 15-year and 30-year mortgage is significant. A 30-year spreads payments but costs far more in interest. A 15-year mortgage typically has a lower interest rate and you build equity faster, but the monthly payment is about 50% higher.
Fixed-rate mortgage payments follow the amortization formula M = P × [r(1+r)^n] / [(1+r)^n − 1], where P is the loan amount, r the monthly interest rate and n the number of payments. Early payments are mostly interest; the principal share grows over time.
Borrowing $300,000 for 30 years at 6.5% gives r = 0.065/12 and n = 360, producing a payment of about $1,896 per month excluding taxes and insurance. Over the full term you would pay roughly $383,000 in interest — more than the original loan.
How much does the term matter? The same loan over 15 years costs about $2,613 monthly but only ~$170,000 in total interest — less than half.
What is PITI? Lenders quote Principal, Interest, Taxes and Insurance together; budget for all four, plus HOA fees where applicable.
Do extra payments help? Yes — extra principal payments early in the loan shorten the term dramatically because they avoid decades of compounding interest.