Question:

What is the interest only mortgage formula and how to do interest only mortgage calculation for monthly payments?

Answer:

The interest only mortgage formula for calculating payments is very simple - interest only home mortgage payments calculation is easy to do when you know the interest rate and the loan amount.

Formula to calculate interest only payments:

Amount x Rate / 12 = Interest-only monthly payment

For example, for a mortgage loan amount of $300,000 at 6% the interest only payment is calculated as follows:

$300,000 x 0.06 / 12 = $1500 a month

Interest only home loan programs will require fully amortizing payments at a later time.

The interest only option holds for limited time as the mortgage needs to amortize. Remember to calculate the fully amortizing payment as well before the interest only period is over so that you know whether you can afford to keep the mortgage, or you will need to refinance.

Mortgage rates hit their lowest since 1955. Ask the home loan experts we recommend Quicken Loans how to take advantage of them.
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