- 1). Determine the sum you need to borrow.
- 2). Contact several lenders to figure out the interest rate that you will pay on the mortgage. Lenders look at your overall creditworthiness when determining your interest rate. Common factors include your credit score and employment situation.
- 3). Calculate the monthly interest rate by dividing the annual interest rate by 12. For example, if your annual interest rate was 5.1 percent, your monthly interest rate would be 0.425 percent.
- 4). Figure the number of payments you will make on your loan by multiplying 25 years by 12 payments per year. Assuming you make monthly payments, your total will be 300.
- 5). Calculate your monthly payment by using the following formula, in which B is the amount borrowed and R is the monthly interest rate:
Monthly payment = B * ( R * (1 + R)^300 ) / ((1 + R)^300 - 1)
For example, if you borrowed $189,000 at a monthly interest rate of 0.425 percent, your monthly payment on your mortgage would be $1,115.91.
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