Use a mortgage loan calculator when comparing a loan modification or refinance loan mortgage rate

A home loan calculator gives you a great advantage when negotiating a new loan with your lender. If you want to get the best mortgage rates when you refinance, there’s nothing better than knowing how to compare the offers you can get from different lenders or brokers. This article is packed with tips on how to use a mortgage calculator to make sure you get ahead before you refinance or modify your loan.

Here are 3 common scenarios where using a mortgage calculator can help you decide what to do…

1. Should I refinance?

First, determine your main objective. For example: Are you more concerned with short-term savings (lowering your monthly payment now), or do you want to save more money in the long term? .

For example. If you had a 30-year loan with an interest rate of 5% and you had been making monthly payments for the last 5 years (60 months), you would reduce your monthly payment if you refinanced for a new 30-year period, say at 4.5 %.

But you could still end up paying more in the long run. The problem is that you have no way of knowing until all the related expenses are factored in. And this is where a mortgage loan calculator can help you. The calculator has places for you to enter the various closing costs, fees, taxes, etc. And only after considering all the related expenses, will you know whether or not you will get ahead.

2. How much income will I need to qualify?

Nothing feels worse than finding your dream home and then being turned down when trying to get financing. Once again, this is a case where using a mortgage calculator can really help. Wouldn’t you rather know if you can qualify for the loan? prior to do you apply?

This is what you need to know…

First: the cost of housing; the expected interest rate; the term of the mortgage (ie, how many years?); and your initial payment. This will show you the total monthly principal and interest payment. But you’re not done yet!

Next, add annual property taxes and annual insurance costs. Using all of the above criteria, the calculator will tell you what your monthly gross income must be to qualify for a loan on your dream home.

3. Should I rent or buy?

Remember the days when we were told that buying a home is ALWAYS a good investment? Emotionally that is probably true. But it is not always the case mathematically. Sometimes it is better to rent, especially in times of uncertainty.

Here’s how to find out…

First, understand that you are going to use your “best guess” estimates. But with a little research, you should be able to get pretty close (most research simply involves asking a real estate agent or property manager a couple of questions). Here are the questions on the homeownership side of the equation:

What annual maintenance costs are typical for a house like this? What is the annual percentage appreciation that I could expect for this property? What percentage of costs of sale should I expect? What are the annual taxes and insurance? What is PMI (private mortgage insurance).

Your rental questions are very simple. First, how many years do you plan to be in the house before selling it? Second, how much is the monthly rent payment? And third, what is the expected % annual rate increase to rent this house? Now you are ready.

Using all of the above factors, a mortgage calculator will tell you: 1. The total payments you would make to buy vs. rent, 2. the total you would save on rent, and 3. the total benefits of buying the home . This will help you make an objective decision based solely on the financial implications.

Other uses  

Other ways you can use a mortgage calculator include finding answers to the following: What would the monthly payment be? What is the main mortgage? What happens if I pay extra every month? Do I have to pay points to lower my interest rate? Which loan is better between two or more offers? What difference would a fortnightly mortgage vs. a standard mortgage do?

As you can imagine, we haven’t even “scratched the surface” of the many benefits of using a mortgage calculator. They can pay handsomely.