Home // Mortgage Calculator – a Handy Tool for Every Home Buyer
Mortgage and Amortization Calculator
This calculator will show you the amortization schedule and breakdown of your payments made towards a home loan.
Calculations by this calculator are estimates only. There is no warranty for the accuracy of the results or the relationship to your financial situation.
Buying a new home is thrilling, and it should be. However, sometimes when we get so excited about the big picture, it can be easy to forget about the little things.
For example, you see the house you want, you know how much it cost, and you’re confident you can afford it. Done and done right? Not just yet. There is still a little more to consider.
Use a mortgage calculator get the real picture of what your monthly payments will be after you factor in the cost of insurances, maintenance, property taxes, and other variables you might have glazed over. A mortgage calculator will also be able to tell you how will a change in interest rates affect your payments.
Remember that the value of your mortgage will be influenced by the real estate industry – which can be volatile. Knowing how these small changes in interest rates or other factors affect you, can help determine what you feel comfortable paying and what house you can really afford.
What Is A Mortgage Calculator?
A mortgage calculator will help you find your estimated monthly payment for your new home.
With a mortgage cal, you can see how much will owe each month, or what home you can afford by playing around with different variables.
These variables include down payments, interest rates, loan duration, and mortgage insurance premiums. For instance, you can use a mortgage calculator to see how much you will save if you put a 20% down payment instead of a 10% down payment.
Does a mortgage calculator work?
Well, that depends on the particular calculator that you choose. The more information it asks for, and you can provide, the more precise the results will be.
The most basic ones will just ask for the essential information like interest rates, down payment, and total home value, but you want to look for a calculator that will include additional costs like PMI, homeowner association fees, and closing cost.
Benefits of a Mortgage Calculator
It will save you money
Take the different quotes you get and plug them into the calculator. You’ll be able to see how much you’ll save by paying different interest rates and how changing your down payment will affect your mortgage. You can also use it to perform reverse calculations before you start looking for a house to get an idea of what price range you can afford.
It will give you accurate information
Unless you can do complex math calculations, it is probably best to rely on a mortgage calculator. If you put in all the information correctly, you will be able to get a 99.9% accurate result to help you plan your next move.
It will help your decision making
Lenders are supposed to go over all this information with you, but not all companies do. By using a cal, you can work out the numbers yourself, without being pressured by your mortgage broker, who might promise low-interest rates but require a huge down payment.
It will save you time
Even if you can do these complex calculations, would you want to? These calculators get you practically instant results that are incredibly accurate. Save your time and get into your dream house faster with a mortgage cal.
Using a Mortgage Calculator
A mortgage calculator is only as good as the information you put in it. For the best results try to get as much information as you can, and make sure you input it accurately. Also, make sure you use one that asks you for important variables such as PMI and any additional taxes. Even if these payments are small, over time, they can add up.
Here are a few features to look at when choosing a mortgage calculator:
Reverse calculation – usually people use mortgage calculators to figure out their monthly payments, but you can work backwards. Some calculators will ask what your income is, or how much you can afford each month, and do a reserves calculation. This will show you the maximum price range, and other variables you can afford before you even start looking.
Additional payments – a mortgage calculator with additional payments will give a more precise value than one without. These include things such as property taxes and insurance. Including these figures may affect your payments by hundreds of dollars a month.
Understandable reports – use a calculator that gives you facts and figures you can understand. The best ones will break down and label each result for you. This was you know exactly what you’re looking at, and understand how the numbers change with different input values.
Terms to Know
Remember that even with the best mortgage calculators you still need know where each variable goes and how to format the information it is asking for. Here is a little reference guide to help with any terms you might not be familiar with.
Principal: this is the total value of your mortgage. If you get a loan of $300,000, then your principal is $300,000. It reduces as you make payments.
Down payment: this is the amount that you pay upfront to reduce the principal amount. For example, if your mortgage’s principal is $300,000 you can decide to put down 20%, which is $60,000 and therefore will reduce the principal to $240,000.
Interest rate: also known as rate or APR, this is the interest charged on the remaining mortgage value. It is usually given as a percentage.
Mortgage length: this number refers to the total months that you still have to make payments on your mortgage.
Loan-to- value ratio (LTV): refers to how much your mortgage is compared to the total value of your house. Lenders use this value to determine your loan limit and interest rate.
Private mortgage insurance (PMI): this is a type of insurance, usually required for borrowers who put down less than 20% as a down payment. Knowing how much this extra insurance will affect your payments may make you reconsider putting a larger down payment so you won’t need it.
Taxes: property taxes are usually charged per year, but can be added to your monthly payments.
Adjustments: if your mortgage is an adjustable-rate mortgage (ARM) then your calculator should show how your interest rate will increase or decrease over a certain period of time. These changes will affect how much money you pay each month.
Homeowner’s insurance: some areas usually require that residents pay this insurance in addition to PMI.
Beyond Your Mortgage
Some calculators will even let you factor extra cost into the equation so you have an even better idea of realistic monthly payments. Even if you can’t find one that does, remember to keep these cost in mind while planning your expenses.