Understanding the long-term impact of a loan? Use this mortgage calculator total cost tool to see exactly how much you will pay back over the life of the loan, including the total interest expense versus the original principal.
Mortgage Calculator Total Cost
Monthly Payment: $0.00
Mortgage Calculator Total Cost Formula
To calculate the total cost of a mortgage, you first calculate the monthly payment, then multiply by the total number of months in the loan term:
Where the Monthly Payment (M) is found via the standard amortization formula:
Variables
- Total Cost: The sum of all Principal and Interest payments.
- P: Principal Loan Amount.
- i: Monthly Interest Rate (Annual Rate / 12).
- n: Total Number of Payments (Years × 12).
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What is Mortgage Calculator Total Cost?
A mortgage calculator total cost tool provides a holistic view of your debt. While most borrowers focus on the monthly payment to see if it fits their immediate budget, the “Total Cost” reveals the true price of borrowing money over 15 or 30 years.
Seeing the total cost often shocks borrowers; over a 30-year term, the total interest paid can sometimes equal or exceed the original loan amount. This calculator helps you compare the long-term savings of shorter terms (e.g., 15 years vs. 30 years) or lower interest rates.
How to Calculate Mortgage Calculator Total Cost (Example)
Let’s analyze a standard home loan scenario:
- Loan Amount: $300,000.
- Interest Rate: 6.0% for 30 years.
- Monthly Payment: The formula yields approx. $1,798.65.
- Total Payments: 360 months.
- Total Cost: $1,798.65 × 360 = $647,514.
- Total Interest: $647,514 – $300,000 = $347,514.
Frequently Asked Questions (FAQ)
No. This specific calculation strictly covers Principal and Interest. Property taxes, homeowners insurance, and HOA fees are ongoing costs of ownership that add to your monthly cash outflow but are not paid to the bank as interest on the loan.
The most effective ways to reduce total cost are: securing a lower interest rate, choosing a shorter loan term (e.g., 15 years), or making extra principal payments to pay off the loan ahead of schedule.
Mortgages are long-term loans (usually 30 years). Even with a moderate interest rate, the compounding effect over three decades means you pay interest on a large balance for a very long time, resulting in high total interest costs.
For “Total Cost,” yes—a 15-year mortgage will always cost significantly less in total interest than a 30-year mortgage. However, the monthly payment will be higher, which may affect your monthly cash flow flexibility.