1. What is Mortgage Cost Of Borrowing?

The Mortgage Cost Of Borrowing represents the total amount you will pay in interest and fees over the life of your mortgage loan. It helps borrowers understand the true cost of their mortgage beyond just the principal amount.

2. How Does the Calculator Work?

The calculator uses the standard mortgage formula:

Where:

• \( Total Interest \) — The sum of all interest payments over the loan term
• \( Fees \) — Any additional fees associated with the mortgage

Explanation: The calculator first determines the monthly payment using the standard amortization formula, then calculates total interest by subtracting the principal from total payments, and finally adds any additional fees.

3. Importance of Mortgage Cost Calculation

Details: Understanding the total cost of borrowing helps borrowers make informed decisions, compare different mortgage offers, and plan their long-term financial strategy.

4. Using the Calculator

Tips: Enter the loan amount in dollars, interest rate as a percentage, loan term in years, and any additional fees. All values must be valid positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What fees should be included?
A: Include origination fees, application fees, and any other upfront costs that contribute to the total borrowing cost.

Q2: Does this include property taxes and insurance?
A: No, this calculator focuses only on the direct cost of borrowing (interest and fees), not escrow items like taxes and insurance.

Q3: How does loan term affect borrowing cost?
A: Longer loan terms typically result in higher total interest costs, even if monthly payments are lower.

Q4: What's the difference between APR and borrowing cost?
A: APR includes both interest rate and some fees, while borrowing cost represents the total dollar amount you'll pay.

Q5: Can I reduce my borrowing cost?
A: Yes, by making extra payments, refinancing at lower rates, or choosing a shorter loan term.