Mortgage Calculators
From LoveToKnow Mortgage
Mortgage Calculators Save Time
A mortgage calculator is a tool that can be used by mortgage companies, realtors, people working in the business world, and any other individual who is interested in determining the monthly payment that is associated with a potential or current loan. Without using a mortgage calculator, the process of determining the monthly payment on a loan would be much more complicated, time consuming, and maybe even impossible for anyone who is not a “numbers” person.
Almost Everything Can be Calculated
Not only can a mortgage calculator be used to calculate the monthly payment on an amortized loan (principal + interest), but a mortgage calculator can also account for property taxes that are charged on a yearly basis, and the cost of homeowner’s insurance - and add those numbers into the loan's projected monthly payments.
It is also possible to use a loan calculator to figure out how much income is needed in order to qualify for a particular loan amount. Most mortgage companies will only permit a person or a married couple to borrow a certain amount of money, and that amount is determined by that person or couple’s monthly income, monthly investment income, and total amount of other types of debt.
Calculators Provide Estimated Numbers
When a mortgage calculator is used to determine what a monthly payment will be on a home loan, it’s important to remember that the numbers the calculator produces are only estimates.
The actual monthly payment may be higher or lower than what the calculator says because there may be closing costs and other fees added to the total amount of the loan. Also, if taxes and homeowner’s insurance costs will be added into the equation, the numbers for the calculation may not be definite numbers. The real numbers will probably be similar to what a mortgage calculator determines, but the actual dollar amount may be slightly varied.
Making Larger Payments than Required
Amortized mortgages have a pre-determined monthly payment due for a set number of months. However, some mortgages allow the borrower to pay additional principal each month in order to lower the total loan amount. Also, some lenders will allow the borrower to make mortgage payments every two weeks instead of once a month. Paying every two weeks may seem impractical, but over the course of 30 years, it can reduce the total amount of the loan by a significant amount.
Mortgage calculators can be used to determine how much a loan would be reduced if additional principal was paid each month and/or if payments were made to the mortgage company every two weeks instead of every month. If the amount that the calculator determines is a significant amount of money, borrowers may choose to use either of these two methods to shave years off the length of the mortgage and/or save a significant amount of money on interest.
Thinking of Refinancing?
Many people look at the terms and conditions of their current home loan and figure that they can refinance their loan for a significant savings each month. This may or may not be true because a lot depends on current interest rates. However, the first step to take when considering refinancing is to find a mortgage calculator on the internet and input the old/current information versus a potential loan with a current interest rate. If the amounts show a large difference, refinancing should be considered.
Calculators Cannot Predict Future Interest Rates
A mortgage calculator cannot foretell the future, so make sure to keep in mind that if an adjustable rate mortgage is being considered, monthly payments on the loan may fluctuate over the course of the loan’s duration.
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