A mortgage calculator is a very useful tool
Many people are confused by the economics and math of mortgage calculations, and a mortgage calculator is a useful tool for anyone who wants to be well prepared with their own figures before negotiating a mortgage.
It’s far better to check your mortgage calculations in the comfort and privacy of your own home than at a mortgage lender’s office. You have time to reflect on the information and try out some variations in interest rates and payment terms. You can also get a good idea of the mortgage you’re likely to get and set your sights on homes in your price range.
Sometimes renting is better than buying until you’ve saved enough for the house you really want, especially if you’re young and not earning much yet. There is a mortgage calculator that allows you to decide which is the best.
Rent or Own: With this calculator, you fill in the boxes with your home’s rental and purchase details and the calculator provides you with the respective rental or purchase benefits. This is given as a cash figure.
Suppose you have decided to buy. Now he wants to know how much he will be allowed to borrow.
Prequalify: This mortgage calculator allows you to determine the maximum your income will allow you to borrow based on your income, outstanding loans and interest, and payment period. This is the maximum amount a mortgage lender will be willing to lend you. However, the mortgage calculations don’t take into account any of your expenses other than the loans, so you may not be able to pay the maximum allowed.
Affordable Mortgage – With this type of calculator, you enter your affordable monthly payment, the current interest rate, and the term of the mortgage. The result is the total mortgage loan you can afford. This should not be more than allowed. You can use these two mortgage calculators to get an affordable mortgage figure to give you a range of prices when looking for a home.
Mortgage Payment Calculator – Now that you have an idea of your projected mortgage amount, interest rate, and term, this calculator will provide you with a final monthly payment amount, broken down into how much of that is interest payment, and how much is principal repayment. Some mortgage calculators provide monthly breakdowns and others provide yearly breakdowns.
Additional Payment Calculator: As your income increases, you’ll likely want to start increasing your monthly mortgage payments to pay them off faster and increase your principal. This calculator tells you how much you’ll save by making extra payments. It can also tell you how much extra you have to pay each month to reduce your term by a certain number of years.
First-time buyers often take out their first mortgage for the maximum period of time allowed to keep their payments low or to make the best use of their affordable payments to buy the best property possible. As their income increases, through promotion or inflation, they can use this type of mortgage calculator to calculate the effects of different additional payments.
If all you want is to find out how much a mortgage will cost at certain interest rates or with specific payment terms, the simple mortgage calculator will do the trick. All it does is calculate the monthly fee from the three variables. You can play around with interest rates and payment terms for specific mortgage amounts.
This is more useful than you think. You should never take the maximum mortgage you’ve calculated you can afford, as increases in interest rates can make a significant difference in your monthly payments. If you’re already stretched and the interest rate goes up, you could find yourself in serious trouble.
Use this calculator to find out exactly what effect each percentage increase in interest has on your monthly payment, then plan for a certain increase in the future. See what that means in terms of repayments, then plan your mortgage to take this into account. Thousands of people do not do this and their homes are repossessed every year.
A mortgage calculator is a useful tool that gives you all the information you need to not only decide on the best mortgage for you, but also help protect you against future interest rate increases. There are several different types, but the ones described above are enough for all your needs.