Have you ever heard about the mortgage calculator? Well, the mortgage calculator probably quite simple. Indeed, a basic calculator is actually easy to use. You just need to enter the loan amount, interest rate, and term. Then, voila, this online tool is able to figure out the associated monthly mortgage payment. For further information, here is an explanation about the use of a mortgage calculator.
What is a Mortgage Calculator?
A mortgage calculator is one of resource that many home buyers use, although before they search for a home. This is a wise way because a good calculator is able to estimate the home price you can afford.
You do not want to look at homes that are too pricey. Besides, you should not assume you can only afford a small house. It is expensive to underbuy, and you will need to sell it and buy again in just a few years. Well, a good mortgage calculator is able to help you determine your optimum price.
More Payment Calculator Variables
Beyond the mortgage calculator, it can become more complicated but also offer more information to borrowers. For example, a mortgage calculator may offer a way to add property tax and homeowners’ insurance expenses or mortgage insurance premiums and put it to the monthly payment.
Or, it probably allows you to figure out the effect of making a larger payment every month, creating an extra payment once a year or making a lump sum payment. Other functions of this mortgage calculator can help borrowers to understand adjustable-rate mortgage, or ARM, payments, biweekly payments, or even blended rate or interest-only payments.
Some calculators also offer a built-in amortization schedule which shows all of the payments, divided by principal and interest, until the loan is paid off. A mortgage calculator also can help borrowers to figure out whether they may be able to get rid of mortgage insurance or weigh whether an ARM will be worth the risk compared to a fixed-rate loan.
In order to understand the added risk of an ARM, use the mortgage calculator to compare the initial, fully amortized and highest possible payments to the payment on a comparable fixed-rate loan. Therefore, this mortgage calculator will be useful for you.
Types of Mortgage Calculators
There are many types and styles of mortgage calculators available. Depending on what you need to do, most of mortgage calculators are very simple and easy to use. Some others even have the ability to input taxes, insurances, and other fees. Here are the primary types of mortgage calculator and how to understand them.
Mortgage Payment Calculator
This mortgage calculator will help you to determine the payment amount on a fixed rate or variable rate mortgage. To calculate it, you’ll need to know the amount of the loan, the amortization period or length of the loan, the interest term and the interest rate and type. Most mortgage calculators of this type then will tell you the expected amount and the balance.
Mortgage Refinance Calculators
Existing homeowners who want to know whether the financial sense usually feels contemplating to refinance their home. This type of mortgage calculator then will show you things like whether refinancing from an ARM to a fixed-rate mortgage. It will be worth the cost.
By using this mortgage calculator, you will need to know what your current adjustable rate terms are and what fixed rate you are likely to qualify for. Not only that, but this mortgage calculator also will help you to understand whether a lower rate that will offset the cost of refinancing.
Mortgage Payoff Calculators
These mortgage calculators can show how different payment schedules and extra payments will affect the mortgage payoff date and also the amount of interest that will be paid. Besides, this type of mortgage calculator is useful especially for people who want to build equity faster and also reduce the amount they pay in interest.
Mortgage Comparison Calculators
By using this type of mortgage calculators, you can see the side by side differences between a fixed rate and an ARM mortgage. Not only that, but you can also compare two ARM mortgages with different terms to see which one best fits your needs.
Mortgage Points Calculators
This type of mortgage calculators can be very useful to determine the break-even period on a mortgage when paying points. The concept of these points can be confusing to many home buyers, but this calculator type allows you to see the effect on your payment and terms when you pay points up front.
Second Mortgage Calculators
For homeowners who are considering to take out a second mortgage, this type of mortgage calculators will show you the effects on your mortgage and the resulting overall payment. They also will calculate and show you the effects of taking out a piggyback mortgage whereby a first and second mortgage is taken out at the same time.
Actually, this is a type of complex calculator, but it can be very helpful to figure out how to structure a mortgage with less than the standard 20% down. As we can see, mortgage calculators come in a variety of types, each with slightly different features.
It is an excellent idea to explore the various types which are available for free online. Some may be easier to use than others because of the variation in interfaces, so you should experiment. One certain thing is, although these are some very handy tools to have when you are shopping for a mortgage.
The benefit of Using a Mortgage Calculator
When people think about what they can afford, usually they tend to either start with how much they are currently paying in rent or for another housing arrangement and also how comfortable they are with the amount. In order to know it, you can use the mortgage calculator feature.
By using a mortgage calculator, you can get the biggest benefit such as a great starting point for figuring out where you stand when it comes to mortgage preparations. Besides, mortgage calculators also can be used as a preparation guide before you go to buy a property especially homes.
That’s all the explanation about the use mortgage calculator that you should know. The information from this mortgage calculator can be so helpful for anyone who is shopping for a loan to purchase a house or refinance an existing mortgage.