# Mortgage Calculators Key Terms

## Learn about a few terms you'll utilize when working with mortgage calculators

Mortgage calculators play an important part of the American and world economies. By inputting several basic numbers into a mortgage calculator, a borrower can determine affordability and purchasing power.

However, unless you've worked with mortgage calculators on a regular basis, some of the terms you come across can be quite confusing. Here are some terms commonly found on mortgage calculators so you'll be ready to determine the purchasing power for your business location.

### Adjustable rate mortgage

An adjustable rate mortgage is a mortgage in which the interest rate can change throughout the duration of the loan. Certain mortgage calculators specialize in the calculation of payments for adjustable rate mortgages.

### Annual percentage rate (APR)

The annual percentage rate, or APR, refers to the actual interest the borrower is paying for a loan inclusive of certain fees. For instance, the APR might be 5%, but if closing costs or other processing fees are rolled into the loan, the APR might actually be 5.25%.

### Bi-weekly payment

A bi-weekly payment calculator refers to a mortgage calculator that applies payments every two weeks to a borrower's mortgage. Each bi-weekly payment is usually half of the normal monthly payment.

### Mortgage points

Mortgage points refer to an amount of money that is paid during closing and reduces your monthly payment over the life of the loan. Many people compare and contrast different loan programs by using a calculator that allows one to input mortgage points.

### Private mortgage insurance (PMI)

Private mortgage insurance, or PMI, refers to an insurance which must be obtained by the buyer if they are placing less than 20% down on their home. Many mortgage calculators factor in PMI because it is a significant part of any potential monthly payment in terms of borrower affordability.

### Negative amortization (NegAm)

Negative amortization, or NegAm, refers to a loan that is actually increasing in value as the borrower makes their monthly payments. These are popular for teaser rate loans where a borrower pays a smaller monthly fee for a fixed period of time, and then readjusts the monthly payment. A negative amortization calculator will help determine the amount of additional debt that will be placed on the back of the loan.