Using a mortgage calculator before applying for a loan can help you avoid any shock when you do finally apply. These handy little tools, which can be found abundantly online, can keep you from making mistakes and ending up heavily in debt by getting too big of a mortgage, or by having to make payments larger than you can afford.
People are often surprised when they see the bottom line of what it will cost them per month to actually get the house of their dreams. One of the main reasons for this is because of what is often perceived as the interest rate – which unfortunately does not accurately reflect the exact monthly mortgage payment and overall costs. Mortgage calculators can enable you to get an accurate picture of the costs.
A home mortgage calculator comes with a variety of features, and some also have different purposes. The best results from using a mortgage calculator will come when you can enter into it as much information as possible. Some are very basic and will only allow you to enter three or four different pieces of information. Naturally, this kind will only provide basic results, and they should not be considered to be very accurate.
Using a mortgage calculator prior to getting one can save you a lot of problems later. They can also help you see which mortgage offer is the better one for your needs, and help you avoid one that will cost you a lot more. When lenders know that you really want a particular house, or are willing to pay a certain amount, then they know that you might be convinced to get a slightly larger loan or a slightly bigger house than what you could afford. A mortgage amortization calculator will let you see what is really involved in terms of monthly payments and overall costs. BankRate says that some mortgage calculators could also show you what will happen to your monthly payment if interest rates go up on an adjustable rate mortgage.
Another article from BankRate mentions that mortgage calculators could also tell you which type of mortgage you might want if you are only going to live in a house for a limited time. A fixed rate mortgage will be higher initially, but an adjustable rate mortgage, which is usually lower to start with, may be the ideal financial instrument for your loan, since they also come with fixed rate portions for three, five or seven years.
On the extreme end, however, there are mortgage calculators that allow you to enter in a lot of data. This kind, such as the one for FHA home loans, will provide you with quite accurate results – which is great if you are getting this type of mortgage. It will allow you to enter into it just about any factor, such as escrow amounts, lender fees, title fees, concessions made by the seller, and more.
Another advantage of mortgage payment calculators is that they can enable you to see how much you could save if you start paying more with each monthly payment, or by making bi-monthly payments. This tactic could save you tens of thousands of dollars in the long run, enabling you to be mortgage free much sooner.
Some mortgage calculators, such as the one on PrimeRates, enables you to enter the basic figures of three different home loans, and then compare the numbers side-by side. You can see the size of your monthly payment, the overall cost of the mortgage, and the actual closing costs. This helps you quickly see which mortgage is the better deal.