A mortgage is a loan secured by real property. The borrower receives money to buy or refinance a home and agrees to repay the loan under the note and mortgage or deed-of-trust documents. The property serves as collateral for the debt.
Estimate a mortgage payment
Enter the loan amount, term, rate, taxes, insurance, and mortgage-insurance assumptions.
Open Mortgage Calculator →Principal and interest
Principal is the amount borrowed. Interest is the lender's charge for lending the money. On a typical fixed-rate amortizing mortgage, the combined principal-and-interest payment is calculated so the loan reaches zero at the end of the term if scheduled payments are made.
Total monthly payment can be higher than P&I
Property taxes, homeowners insurance, and mortgage insurance can be included in the total payment, often through an escrow account. HOA or condo dues are usually paid separately. That is why a mortgage estimate should distinguish principal and interest from the total housing payment.
Fixed-rate vs. adjustable-rate mortgages
A fixed-rate mortgage keeps the interest rate fixed for the loan term. An adjustable-rate mortgage can change after its initial period according to the loan's index, margin, adjustment schedule, and caps. Compare the Loan Estimate and ARM disclosures for the actual terms.
Mortgage term
The term is how long the loan is scheduled to run. Common examples include 15 and 30 years, but other terms exist. A shorter term generally raises the required monthly principal-and-interest payment and can reduce total interest, all else equal.
What happens if payments are not made
Because the home secures the mortgage debt, serious delinquency can lead to foreclosure under applicable law and the loan documents. Borrowers having trouble making payments should contact the servicer promptly and review available housing-counseling or loss-mitigation resources.
What to compare before choosing a mortgage
- interest rate and APR,
- loan term and type,
- points and lender credits,
- projected monthly payment,
- closing costs and cash to close, and
- property-specific taxes, insurance, and HOA costs.
Bottom line
A mortgage is both a loan contract and a long-term housing-cost commitment. Compare the full payment and transaction terms rather than focusing only on an advertised interest rate.