Calculators to Help You with a Mortgage
There are free calculators on the Internet that can help you decide whether to buy a home or keep renting, which loan is best, and how much you could save by making extra mortgage payments. This article describes some of the mortgage calculators available.
How Much Loan Can You Get
Before you go house searching you may want to know how expensive of a home you can afford. An affordability calculator will take a look at your income, all your debts (auto loans, credit card debt, etc), taxes and insurance for the new property, and information about the loan itself to determine the maximum loan amount you might be able to obtain.
Monthly Payment
Your monthly mortgage payment is made up of a variety of costs, including principal, interest, taxes and insurance. A payment calculator considers all these and gives you your actual monthly payment. This is an important figure to know when determining whether or not you can afford a loan. Remember that even if you’re able to obtain a loan, you still have to make the monthly payment.
Keep Renting or Buy a Home?
Another great tool allows you to see how much money you’ll lose or save by renting, and how large a benefit buying a home might be. You’ll be able to change the number of years used in the calculation. So for example, if you were planning to buy a home and then sell it in five years, and you wanted to know if that was better than renting for the next five years, you’d put a “5″ into the appropriate field in the form. In this case you might see that you’d save $80,000 in monthly payments if you rent, but that you’d make that up and earn an additional $5,000 when you sold your house. So if you were able to pay the larger mortgage payments now, you’d end up better off after your house sold.
To Refinance or Not to Refinance?
You might want to refinance if it lowers your monthly payment or the total amount paid for your home. A calculator can help you decide this. How soon you’ll sell your home after refinancing is important data this calculator will consider. For example, if you sell your house in five years, your savings due to refinancing might be $1,500. Waiting five additional years (for a total of ten) would increase your total savings to $4,000. However, if you wait too long, say 25 years before selling, you’d end up losing $7,500. That’s why this calculator is important.
Loan Comparison
Mortgage lenders provide different loan products from which to choose. It’s important to compare the products to see which have the lowest monthly payment and which will end up costing you the most over the life of the loan. A calculator that helps you do this might take into account closing costs, interest rates, and points. Most calculators probably don’t consider mortgage insurance, so be aware of this when looking at a loan that requires it.
Making Extra Payments
Will making a mortgage payment every two weeks save you more money than paying once a month? A calculator can tell you this. You’ll be able to see how much interest you’ll save and how much sooner you’ll pay off the loan. A good calculator will take into account the fact that you’ll lose some tax savings by paying off the mortgage sooner, and will give you a “net savings”.
These mortgage calculators can assist you in deciding whether to refinance or buy a home.
