Apart from principal and interest rate, prospective borrowers need to know the length of time over which a loan is to be paid in order to calculate monthly payments, explains the Consumer Financial Protection Bureau. Insurance and other costs should also be considered when calculating such payments.
Continue ReadingThe size of monthly payments typically varies by type of loan, explains the CPFB. For instance, the monthly payments in an adjustable rate loan depend on the prevailing interest rate. In contrast, interest rates and monthly payments in a fixed rate loan remain constant throughout the lifetime of the credit facility.
Private mortgage insurance, property taxes and other costs are also taken into account when calculating monthly loan payments, advises the CPFB. In addition, utility payments and other costs that are not related to a loan should be considered when determining the ultimate monthly tally.
Monthly payments can be determined using specialized calculators found on websites such as Bankrate and Interest.com or on the Internet portals of organizations such as the Bank of America. In order to give results, Web-based calculators require certain information. For instance, the calculator on Interest.com requires users to input the loan amount, interest rate and loan term in months. To give nuanced results, the calculator at Bankrate requires information such as the start date of a mortgage loan and the size of extra payments in addition to basic information such as principal and interest rate.
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