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The “principal” refers to the amount you borrow from a lender. For example, if your mortgage is for $500,000, the principal is also $500,000. Your lender charges interest on top of the principal, adding to the amount you owe.

As you pay down your mortgage, you’ll work towards paying down your principal as well as paying the interest owed on your mortgage. With our calculator, you can track the principal paid down with the yellow line, the interest paid with the green line, and the total amount you pay towards your mortgage with the red line.

Before heading to a bank to get pre-approved for a mortgage, you can estimate the total mortgage you may be able to afford with our Mortgage Payment Calculator. Generally, no more than 39% of your gross income should go towards your mortgage principal, interest, property taxes and heat combined. For example, a household with an annual income of $100,000 can likely put $39,000 per year towards their mortgage and house-related fees. Per month that’s $2500. By putting $2500 into the monthly payment box and adding an interest rate based on current rates, you can estimate how much mortgage your household may qualify for with a lender.

The amortization period refers to the total length of time in years it will take you to pay back your mortgage’s principal amount and the interest, based on your current interest rate. This period will likely go past your current mortgage contract: many contracts are for 5 years as an example, but with a 25 year amortization period.

You can calculate your estimated amortization period with our Mortgage Payment calculator. Simply fill out the boxes for your mortgage amount, payment amount and frequency, and interest rate to see your current amortization period. Try adjusting the payment amount or interest rate to see how your amortization period changes.

There are a couple ways you can reduce how much interest you pay a lender throughout the length of your mortgage. The first is less inside your control, and that’s by having a lower interest rate. Interest rates fluctuate, and having a lower rate can make a significant impact both on the amount of interest paid to your lender and how quickly you’re able to pay back your mortgage. A second way to reduce the amount of interest paid is by shortening your amortization period through increasing your payment amounts. By having a faster payback period, you’ll be able to pay down your principal faster and less of your monthly payment will go towards paying interest.

Auxilium Mortgage has a wealth of resources online for current homeowners and homeowners to be. Check out our other calculators to help you make smart decisions, read the hundreds of blog posts from our expert mortgage team, and contact us for a complimentary consultation if you’d like answers relating to your unique financial situation. We can’t wait to chat with you more!