Tips On Using A Mortgage Calculator

Getting a mortgage, especially, if you are buying your very first home

, may be a very big deal for you. There are many things for you to consider, such as the value of the home you are going to buy, if you can actually afford buying a home of that particular value, how much you can afford to spare every month to make the required monthly payments of your mortgage and if you are going to be able to maintain or increase your income to accommodate to other home related expenses once you have purchased a home. This is why you might want to learn to use a mortgage calculator to help you with your mortgage decisions.

Basically a mortgage calculator is a formula or a tool developed to assist you in estimating the cost of monthly mortgage payments. When you have an estimate of your monthly payments, you might be able to better gauge the value of the property that you can afford to purchase and plan your monthly budget well to be able to make payments. There are various types of mortgage calculators available. Generally all of them may allow you to at least calculate your monthly payments based on the size, interest rate and terms of your mortgage

When using a mortgage calculator tool, there are things that you may have to know or understand beforehand. One of the items you may want to take note of is the interest rate or the kind of interest you want to be considering. You might need to decide whether you will be taking a fixed rate mortgage or an adjustable rate mortgage. If you are getting a fixed rate mortgage, your interest rate is going to remain the same all throughout the entire life of your loan. If your loan is of the adjustable rate type, the interest rate is going to fluctuate according to the current market rate in relation to your mortgage companys indices and margins.

It is also logical for you to know the amount of your loan before you start using any tools to calculate your mortgage payments. The rule of the thumb is that you subtract your down payment from the price of the home you are purchasing to get your actual loan amount. For example if you are buying a house that is worth $250,000.00 and you have already put a down payment of $25,000.00 your loan amount is actually $225,000.00 ($250,000.00 - $25,000.00). Once you have determined the amount of your loan, you may need to know the interest rate that is imposed on your loan. The term of your loan is also a factor that you may want to seriously consider and include in your mortgage calculations.

The above information is only the basic of what you may have to include in your mortgage calculations in order to estimate your mortgage payments. Once all the information has been keyed into the calculator, you may be able to see a rough estimation on the monthly payments that include the principal and interest that you may have to make.

In some cases, your calculator tool might not include private mortgage insurance. Normally, if your down payment is more than 20% of the purchase price your lender may allow a waiver of the private mortgage insurance. However, if your down payment is less than 20% of the purchase price of your home, you may have to pay for private mortgage insurance. Other property taxes or insurance may also be left out from the calculations. So you might want to get your loan provider to further detail out the payment schedule or scheme that is suitable for your financial situation.

You may have to bear in mind that usually mortgage calculators are only a rough estimate and may not necessarily reflect the actual mortgage rate that you may be entitled for. Therefore it is advisable that before you make any decisions, you speak with a professional mortgage expert to avoid making decisions based on an error in calculation.

by: Ask Bill

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