# Calculating Mortgage Payments

Loan payment calculator is a useful tool to calculate the necessary monthly (or even any other regular) payments on loans after taking into account different interest rates. For instance, you could easily figure out your mortgage or car payment with just a few clicks. It helps to determine the amount of money needed for repayment of a loan by considering different factors such as interest rate, loan amount and term. The following are some tips on how to use a Payment Calculator:

The first thing you have to do is to choose a site that provides the service. There are sites that offer both free and paid calculators. Usually, these sites contain basic loan information such as type of loan, number of installments and due date. Once you have chosen a site you will be able to choose the type of calculation you want to run. The choices include monthly, weekly or daily calculations. Some loan payment schedules feature more than one type of calculation.

The next option is to choose a loan calculator that runs only on fixed interest rate loans. These types of calculators take the yearly percentage change in the prime loan rate into consideration. Fixed rate loans are generally preferred by those who need to calculate monthly payments because it remains constant, whereas adjustable rate loans tend to change with time. If you are planning to take out loans that have a high interest rate, then it is advisable to take the fixed rate loan.

The third option is the one that combines principal and interest amount. This calculator can be used to determine the amount of payment you can afford on a monthly basis. For this, all you have to do is to enter the interest rate and the amount of principal that will be paid as a monthly payment. You will receive the monthly payouts as long as the principal remains unchanged.

Last but not least, there is the fixed term calculator. Here, all you have to do is to select the loan term that you want to calculate the principal and the interest rate at the end of the loan term. For this purpose, the calculator uses the assumption that the interest rate will remain same for the entire life of the loan. The calculation here is based on assumption, so there is no guarantee that the monthly payment amount will be the same as what is shown here.

One thing that you must keep in mind is that the calculators do not provide any information on how much the actual interest rate will be once the loan term expires. So you may find that the actual APR differs from the calculated APR. However, you should not get overly excited as this difference is very insignificant. Most of the calculators use level interest rates while determining the APR. This means that they are basically using average interest rates for all the loans that the calculator handles. However, the level interest rates will definitely affect the amount that you pay down in your mortgage.