WHAT IS A MORTGAGE CALCULATOR AND HOW YOU CAN BENEFIT FROM IT

If you are planning to purchase a home, knowing how much you can spend within your budget may seem like solving a difficult puzzle. Before you go on a lookout for properties to acquire or call a mortgage broker to begin your home loan application, use a mortgage calculator to help understand more about your finances. This is because a mortgage calculator interprets the price of a house or the amount of loan into the monthly payment.

ONLINE MORTGAGE CALCULATORS

These calculators refer to automated tools that help the users determine mortgage information based on certain variables such as the amount of mortgage, the payment frequency, the interest rate, and the amortization loan period, which is the duration it will take to pay the mortgage plus the interest. Since the calculator is automated, you only need to fill in the necessary fields, and it will generate the result. Depending on the information you need, there is a calculator for it.

TYPES OF MORTGAGE CALCULATORS

While you use the basic calculator to determine monthly payments, these calculators can also help with your financial planning:

• ADDITIONAL PAYMENTS.

  This calculator calculates the result of additional repayments or increases the amount of payment to pay the mortgage faster.

• BORROWING CAPACITY.

  Using similar criteria that banks do, it calculates the borrowing capacity according to your present situation in income, expenses, liabilities, assets, etc.
  You can find out the impact of depreciation overtime on your payments as well as your total loan amount by the end of the term.

• COMPENSATION CALCULATOR.

  It determines the prepayment costs with regard to your mortgage.

• PREMIUM CALCULATOR.

  You can find online calculators that calculate the amount of premiums, whenever necessary.

HOW DOES A MORTGAGE CALCULATOR WORKS

A mortgage loan allows you to borrow a certain amount to purchase a property. You pay the loan through monthly payments. The mathematical formula that is used to determine the monthly mortgage payments is quite complex. This is where a mortgage calculator is useful. The tool will do the calculation for you. The calculator can find out the payment necessary every month for a specific loan amount or home price. It eliminates the need to calculate by hand, which you may do it incorrectly.

IF YOU ARE STARTING OUT AND UNFAMILIAR WITH THE PROCESS,

if you want to know how much you can spend on a property, a mortgage calculator can help you get the answer. You can also get an estimate of the amount you have available for the interest and principal payment by subtracting the estimates for homeowner’s insurance, property taxes, or if applicable condo/HOA dues and mortgage insurance. At this stage, you only have rough estimates, but that is fine.

Use a mortgage calculator that can give you the maximum amount of loan you can afford. To calculate, it needs the interest rate, interest payment, and the principal amount. Begin with a ballpark loan amount or house price plus an interest rate to determine whether the interest and the principal payment are reasonable and affordable. Try to calculate using different scenarios. Keep in mind that the numbers you get at this point are only a starting point. Continue to move forward and obtain more information. Then, go back anytime to refine your initial calculations.

WHEN YOU BEGIN TO CHECK AT SPECIFIC PROPERTIES.

Using a mortgage calculator will give you the interest and the principal amount for particular loan amounts and home prices. It can also help if you add the estimates for homeowner’s insurance, property taxes, condo/HOA dues, mortgage insurance, etc., to the principal and interest amount every month. By doing this, you will have a good idea of how much a specific property will cost you every month.