## Making Good Use of Mortgage Calculators

If you are thinking about buying a new home, there are so many financial details to consider. What will the payment be? How much can you save if you make additional payments or go to a bi-weekly mortgage payment? How much money will you need to earn each month in order to afford your dream house?

Instead of guessing, you can use a mortgage calculator to help you determine the answers to these important financial questions.

Time is money, and if you make extra payments on your home loan you can pay it off faster and save money over the life of the loan. An online mortgage calculator can help you figure out how paying different extra amounts each month will shorten the loan’s term and reduce the amount of interest you will pay.

You can calculate mortgage payments for a home you wish to buy. Simply put in the loan amount, the interest rate and the term of the loan, and the online calculator will figure it out for you.

In this way, if you are looking at more than one home, you can compare what the payments would be and then make a more informed decision to help you narrow down your search for a new home.

## Estimating The Amount That You Can Afford

You also have to determine how much home you can afford. When you plug the house payment amount, along with other expenses you have, into a free mortgage calculator, you will get your answer. You want to buy as much house as possible, but only as much as you can comfortably afford, and this tool is a great way to discover how much that will take.

Banks will tell you how much you can borrow when you want to purchase a new home. It is helpful, however, to plug your numbers into a home mortgage calculator, so you will have an idea in advance of what to expect.

Discount points are an option when you are looking at a new home loan. By using an online calculator, you can fill in the blanks for the interest rate and the rate with discount points, and let it calculate mortgage payments for you to see how they compare.

## The Advantages of Using a Mortgage Calculator

Standing toe-to-toe with a mortgage broker can be intensely frightening. Brokers not only spend most of their time scowling and arching their brows, but they seem—for my tastes—a bit too deft with a fountain pen (imagine not only being denied the loan but also exiting quite unceremoniously with ink scribbles tattooed across your shirt). My point is this: Why not when meeting with a potential lender, be equally armed?

Online mortgage calculators are a sort of homeowner simulation program, where different variables can be electronically inputted and accurate results instantaneously displayed.

Quick navigation through one of the thousands of mortgage calculator websites currently available (www.erate.com is one such site) will yield near-perfect statistics for any mortgage situation.

And, by comparing and contrasting different variables, a prospective homeowner can decide whether to rent or to buy, whether to apply for a 15-year fixed interest loan or a 5-year hybrid adjusted interest mortgage or whether to refinance at any given time.

**Loan Amount**

An essential factor in accurately calculating mortgages is the desired loan amount (also referred to as principal). Prospective homeowners willing and able to provide a substantial down payment, ordinarily receive better loan terms (i.e. lower interest rates through lower lender fees and points).

In addition, a lesser amount of principal usually implicates a shorter loan term—shaving off months of unneeded interest payments.

A mortgage calculator allows potential borrowers to alter the loan amount variable to discover a comfortable and affordable solution—remember: if a borrower sinks all their savings into a down payment and consequently cannot meet monthly payments, they default on the loan. In this respect, mortgage calculator websites grant new-fangled flexibility in ascertaining a perfect balance between down payment and principal.

**Loan Term**

The chief determinant of the amount of interest paid over the life of a loan is the length of the loan. Interest, in most loans, accrues annually at a specific rate. By trimming down the length of the loan, borrowers subsequently slice off vast portions of interest payments (for instance, a 15-year fixed interest rate mortgage at 6% will save, depending on the loan amount, a homeowner thousands of dollars in interest portions versus a 30-year fixed loan).

Mortgage calculator websites allow consumers to determine whether a 15-year loan (which, obviously incorporate higher monthly payments than longer loans) is an affordable and viable option, given their current economic position.

**Credit History**

A prospective borrower’s credit history is extremely influential in determining interest rates, not to mention whether a loan gets approved. Lenders consider consumers with poor credit ratings “high risk” customers and subsequently use this position to increase interest rates and closing costs.

Knowing your credit record inside and out, as well as the ability to explain any discrepancies helps immeasurably when facing off with a broker.

Answering this call, mortgage calculator sites allow potential borrowers with a checkered credit history to distinguish the average mark-ups with respect to home mortgages. If a lender attempts to gouge, retort with the calculated data you’ve accrued.

Through the use of mortgage calculator websites, dozens of other factors (adjusted interest rates vs. fixed interest rates, whether to refinance or not) can be closely examined and analyzed in order to determine when, where, and with whom a prospective homeowner should accept a home mortgage loan.

Dealing with brokers becomes infinitely easier when hopeful homeowners show up educated and ready to barter. And this way, when the broker whips out his or her fountain pen, you know it’s just to sign the papers.

## Discussion On Various Mortgage Calculators

A mortgage calculator gives you a tremendous advantage when negotiating a new loan with your lender. If you want the best mortgage rates when you refinance, nothing beats knowing how to compare offers you may get from different lenders or brokers.

What to look for when using mortgage calculators.

Mortgage calculators provide you with simple computations on your loan. Here’s what you can figure out using such calculators.

**Mortgage/home affordability: **

How much mortgage you can afford is what you can calculate using the affordability calculator. This is turn will help you decide how much you can afford to spend on your home purchase.

**Monthly mortgage payment: **

Your monthly mortgage payments can be figured out by using mortgage calculators. Such calculators can also help you determine the total monthly payments for the entire loan term.

**Compare loans at various rates: **

There are mortgage calculators, which give you the chance to compare monthly payments on loans at different rates of interest. Such figures make it easier for you to pick and choose the best from a variety of loan programs available in the market.

**Compare payments at different terms: **

You can calculate and compare payments at different loan terms, say 10 years, 15 years, etc. Loan calculators providing such computations show you how the total interest and monthly payments vary with changes in the loan term.

### Calculators For Different Purposes

A couple of years ago it was impossible to imagine that a person would be able to use a calculator online. But today everybody has such a wonderful opportunity. And online calculators are especially convenient for people who need to calculate mortgage and loan rates.

There are different types of online calculators for different purposes. Let us discuss a couple of them.

### Regular Mortgage Payment Calculator

The first one is a regular mortgage payment calculator that helps to make up a table of payments that should be done monthly. To use it, it is necessary to enter the vales (principal and interest) and this machine will generate a table for you.

The second thing to be discussed is also a simple loan payment calculator. With its help, everybody can see the amount of money it is necessary to pay. And again, the procedure is more than simple. Just enter the necessary values (principal, interest rate and the number of years) and that is it.

As you can see, the word calculator has changed its meaning these days. These machines have become more convenient and easy to use by everybody. Even a child can use it without any problems. And the Internet makes the whole process even more convenient.

**APR Calculator:**

There are calculators that help to evaluate the APR or the Annual Percentage Rate on your home loan. To begin with, we should understand the meaning of APR. These three letters stand for annual percentage rate. It is the effective interest rate on your loan.

You can compare loans on the basis of APR and select the one you prefer. However, not every loan with a low APR necessarily implies that you may be charged a low rate of interest.

With the help of the APR calculator, we can measure the overall cost of a loan. There are many “extra” expenses (closing costs, charges, such as mortgage insurance, points, etc.) that influence the interest rate over a certain period of time. And APR is extremely helpful because it shows how all the expenses mentioned above influence the amount of money you will have to pay.

It looks complicated, but in reality, this calculator is one of the simplest. There is a lot of information that is necessary to input to get the result. Let us start from the beginning. The first digits would be the amount of loan.

After that come interest rate (a quoted one) and the period of repayment. Then it is necessary to put the percentage of the loan that is made as a one-time payment at the very beginning. And, finally, closing costs. All the figures can be calculated by means of the closing cost, monthly payment, interest payment calculators.

The purpose of APR is to help you to compare various mortgage loans and to choose the best one for you. But you should keep in mind that the calculator works only if you are going to compare identical loans.

## Pre-qualification Calculator

This calculator makes it possible to understand the way lenders see you. This online calculator helps people to analyze the amount of money they can borrow based on their income, assets and the existing interest rate.

In order to see whether you prequalify or not it is enough just to enter the following financial information. Gross household income without taking into account deductions and taxes, the number of years you need to repay the loan, mortgage interest rate, the percentage rate (not the dollar amount) of the local property tax rate, various monthly obligations and the amount of money you have to pay.

As you can see, the whole procedure is more than simple, but how accurate is it? Some people who have used this type of calculator say that the thing is accurate and shows a real state of affairs. There are also others, who believe that this thing is not helpful at all and the results are inaccurate.

The second group of people consists of those mainly, who are not very attentive and make a lot of simple mistakes, such as entering early income instead of monthly one or forgetting to enter different expenses (auto or bank loans).

People should be very attentive when using these calculators. They are accurate, but there are no laws that say that a lender is supposed to stick to a standard when thinking about how much to lend you.

## Amortization Calculator

When a person is interested in refinancing or is shopping for a mortgage it is a good idea to use an amortization calculator. With the help of this device, everybody can easily determine his/her payments over a period of time. Let us discuss the way this calculator works.

When using this machine for calculating monthly interest and principal payment it is necessary to keep in mind the fact that taxes, such as property ones and different types of insurance are not included in it.

It is possible just to enter the amount of money a person wants to borrow, after that there is a line for interest rate and, finally, the period of time to make a repayment. The procedure is quite simple, isn’t it? It helps to understand the amount of money a person can afford to borrow.

There are also situations when it is necessary to pay off a mortgage earlier. In this case, you can adjust the term and see the amount of money you will have to pay monthly. As you can see, the amortization calculator is very helpful in our life.

With their help, you can identify terms of the mortgage that meet your needs better. You can also understand whether you will be able to pay this money or not. And remember, that it is better to do short research to get the best loan rates.

## Saving Calculator

The answer to the question is not a complicated one and can be put in one sentence. Savings calculator makes it possible to see the amount of money a person can save by a certain date. But there are much more advantages to it. Let us see what they are.

Many experts point out that Americans put more and more money away, because of the current financial crisis. The household savings rate increased by about two percent.

What is more, folks are simply not prepared for the situation of financial emergency. That is why this machine is very helpful these days. Calculator makes it possible to enter the amount of money a person is ready to save monthly and the interest rate.

Consequently, everybody can see the amount of money he/she will have over a certain period of time. Let us take 100 dollars, for instance, and see how much money we will have in 24 months if the interest rate is 8%. After 24 months a person will have 2,584.21 dollars.

Many people still don’t understand the reason for saving money. They are numerous. If a person saves, it helps to fund his/her retirement, to pay for kids’ education, to get out of debt much faster and a lot more.

The overall financial health will be much better. But to make saving possible a person should look for good interest rates and savings accounts, such as CD or certificate of deposit, money market or basic savings accounts.

Read also: The Definition and Facts About Second Mortgage

## How to Use Fixed Rate Loan Calculators on the Internet

If you are planning to buy a house, then you must be worried about your monthly payment. You can easily determine your monthly payment without any need to go to a real estate agent of a bank. You can do all the calculations online right from the comforts of your home.

**Fixed rate Loan Calculators-Why they are so useful?**

A fixed-rate mortgage loan calculator is an easy financial tool to use. You have to enter the loan amount and the present rate of interest. The calculator will do its match and will tell you your exact monthly installments over a period of time, whether it is 10, 15 or 30 years.

All the available options are easily visible and you can choose the best ones according to your needs. There are numerous online fixed-rate loan calculators. With this calculator, you save yourself from hassles of approaching a finance consultant or a lender and thus avoid chances of fielding their telephonic solicitations for years.

The fixed-rate home loan calculator is the oldest and highly popular on the Internet. Mostly referred to as payment calculator, it can calculate payments for you depending upon the interest rate, length of the loan amount, and the amount that you want to borrow.

Many fixed-rate home loan calculators also allow you to input PMI, taxes, and home insurance, and they will calculate payments for you. Their output also includes amortization report.

Ways to find a good online fixed-rate mortgage calculator

You can easily find a good mortgage loan calculator by following a few easy steps. Let’s have a close look at few of them.

* You can also check on the website of your bank. Most of them include some kind of loan calculator.

* Search for such calculators on the Google, by typing “online fixed-rate loan calculator”. You will get many options.

Operation of some of the calculators is very simple. Just enter the duration of the loan, enter the interest rate, and then click on the calculate button. If you are not sure about the rate charged by your bank, you can do calculations by entering different rates to determine payments based on those variances.

When you will use a few online fixed-rate loan calculators, you will find that many of them show different results when you feed identical values.

In fact, you may like the functionality of a few of these calculators over others. You should avoid calculators that do not allow you to enter the loan term. Some calculators also show you the loan amount you can easily afford considering there are no other debts to be paid.

Lastly, you should not base your conclusions just on the basis of the result from one online loan calculator. Try a few calculators until you are successful in finding the best one for your needs.

Don’t be discouraged if an online fixed loan calculator shows payments that are much higher than what you can actually afford. This shows that you may be planning to buy a property that is out of your budget.

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Read also: The Different Types Of Mortgages in Europe