A mortgage calculator is one of the most useful tools at your disposal when it comes to buying a home. Whether or not this is your first home, a mortgage payment calculator can benefit you in several ways. At the most basic level, this tool can tell you what your monthly loan payments will look like for a particular property. Beyond that, a calculator can prepare you for the loan process by helping you choose a down payment amount and more.
In order access the full benefits of a loan calculator, you need to pick a trustworthy and detailed version. This tool is available from a variety of sources, but only some provide enough detail to give an accurate payment estimate. Once you receive an outline of your payment, you can use that information to figure out if you meet eligibility requirements for Fannie Mae home loans and other types of mortgage. With the help of a calculator, you can adjust the different variables of your mortgage payment to find the best plan for you.
What is a mortgage calculator?
Mortgage loan calculators are helpful tools in the home-buying process. They allow users to estimate monthly mortgage payments based on a particular loan amount. Both homebuyers and lenders utilize these home loan calculators in order to determine the specifications of a loan, including loan term and down payment requirements. Overall, many different factors are included in the total price of a home, including the principal loan amount, interest rate, taxes and insurance. Together, these factors make up the term PITI, and each has an effect on your monthly payment amount.
Calculating a mortgage loan on your own can be difficult. With this in mind, a monthly payment calculator is meant to make calculating all the elements of PITI quick and easy. It allows you to determine right away whether a loan is affordable or not. Similarly, it allows lenders to see how much of a risk you may pose as a borrower. If you try to apply for a loan without using a calculator first, you may overshoot your housing budget or get denied for the loan you want.
You can learn more about the variables that make up a mortgage loan when you download our comprehensive guide.
The Benefits of Using a Mortgage Payment Calculator
“How much mortgage can I afford?” is one of the most important questions you need to ask yourself before you purchase a home. Fortunately, using one of these calculators can help provide the answer in no time. But that is not the only benefit that a house loan calculator can bring to your home-buying experience. In fact, you can utilize the calculator throughout the home buying-process: from finding a property to making your down payment. Using a calculator to predict your monthly loan payments can help you:
- Find a mortgage rate that fits your finances.
- Create a budget so you can focus on affordable properties.
- Find the right lender with manageable rates and fees.
- Determine the size of your down payment.
- Predict what type of loan you will qualify for.
Some mortgage calculators can even help you determine the level of income you need in order to qualify for a mortgage, helping you avoid the common home-buying mistake of looking at homes you cannot afford. However, not all calculators offer the same benefits. In order to access all of these advantages, you need to be mindful of the calculator you choose.
How to Find the Best Mortgage Loan Calculator
Mortgage payment calculators are available all across the internet. They are offered by financial institutions, finance blogs and other third-party sources to give you the information you need. Some providers even offer calculators in the form of an app for your smart phone. This can help you compare mortgage prices for various properties from wherever you are.
However, each source offers a slightly different version of the mortgage calculator. Some are more detailed than others, even sometimes including other housing expenses in the calculation. Many even include a breakdown of each component to help you understand the overall results. Alternately, if the calculator you use only includes certain costs, you may miscalculate your budget and face issues later on. Therefore, make sure to choose a calculator that provides all of the information you need in order to get the most effective results.
What information do I need to use a mortgage calculator?
To use a monthly payment calculator for your mortgage loan, you must provide certain information in the tool. Since not all calculators are the same, the information you need to include will differ depending on which version you choose. However, there are a few questions that every calculator must ask in order to provide any sort of mortgage estimate. Even the most basic calculator tools will require the following:
- The price of the home you want
- An estimated interest rate
- The length of the loan
- An estimated down payment amount
The most detailed loan calculators also allow you to include other monthly costs in your payment, such as homeowners association (HOA) fees. While you are able to give estimates, only the most accurate answers can give you the best estimate for your monthly payments.
Download our helpful guide to find out more about what goes into a mortgage rate calculation.
How to Calculate Mortgage Rates Using the Calculator Tool
Most online mortgage calculator tools are designed to be very user friendly. In fact, the calculator does most of the work for you. Once you gather the details about your potential mortgage loan, the calculator provides a breakdown of your possible monthly payment. However, it can do more than provide a prediction of your payment amounts. When used properly, your mortgage loan calculator can help you optimize the different variables for the lowest monthly payment possible. Follow these three easy steps to use your calculator for maximum benefits:
- Enter the necessary information. Make sure to include all of the details outlined above as accurately as possible. You can also have information on several different properties and lenders ready to compare.
- Review the results. Determine whether the monthly payment estimate given is suitable for your finances, or if it is over or under your budget.
- Make adjustments as needed. If your payments are too high, consider a higher down payment or a more affordable property.Alternately, you can consider other lenders with lower interest rates or look into down payment assistance programs.