#### How would the outstanding loan balance be calculated?

If you wanted to pay off your mortgage balance in full today, how would the outstanding loan balance be calculated? Your monthly mortgage statement will usually show the principal balance outstanding, but this is not the amount due to pay the balance in full. In fact, the statement probably even says that. If you want to pay off the loan in full, you have to call your lender and request an actual payoff amount.#### Your monthly payment includes both principal and interest.

The reason for this is because the principal balance on your mortgage statement doesn’t account for any interest that’s accrued on the loan since you made your last payment. Remember, your monthly payment includes both principal and interest. The principal balance on the statement accounts for the former, but not the latter.#### How this works?

To see how this works, let’s assume you have a principal balance of exactly $100,000 as of this month’s mortgage statement and your interest rate is 4.50%. The approximate interest due on your next payment would simply be the interest rate multiplied by the loan balance, which is then divided by 12:$100,000 * 4.50% = $4,500 total annual interest

$4,500/12 months = $375 total monthly interest