Mortgage Calculator

Mortgage Calculator – How to Use a Mortgage Calculator to Make the Right Choice

Your house is perhaps the biggest asset that you will invest in and own in your life. That is why it makes sense to use a mortgage calculator for finding the most affordable and flexible financing for you. These tools are especially designed to save you time and effort that you would otherwise spend on doing the math yourself. They are very simple and easy to use and very effective as well. Here is how to take advantage of them.

Mortgage Calculator Basics

The mortgage calc is based on a set of variables. The main ones include loan principal, periodic compound interest rate, loan term, number of payments per year and total number of payments and payment amount. All of these variables are dependent on one another. When one changes, all of them will change. This allows you to use the calculator to compare different loans and to consider different scenarios for the repayment. Consider some advice on how to work with the variables so that you can make the best decision in the end.

Variables

Consider the variables of a simple mortgage calculator and how to use them:

Principal – This is the amount of money that you will borrow. It is quite simple to come up with it. Just take the price of the house that you want to purchase and subtract the down payment that you are prepared to pay out of your pocket. You should enter different loan amounts to see whether it will be more affordable to buy a smaller home and how much you will save by making a bigger down payment.

Interest Rate – This is the major determinant of the cost of the loan and the monthly payments so the different options should be looked into carefully. You can readily use ready interest rate tables for your area or preferably quotes that you have obtained to get an accurate picture of the situation. If you plan to buy mortgage points to reduce the interest, you can readily work with the lower rates that you will secure.

Term – You can experiment with different mortgage terms to figure out which option will be best for you. There is one simple rule to keep in mind. The longer the term is the more expensive the loan is and the lower the monthly payment is.

Refinance at
Loan Type

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Payment – The payment is typically a monthly installment. When you enter all of the above numbers, you will automatically get this one. However, you can always do things the other way round and start by entering a payment which will be affordable to you. That way, you can find out how much you can borrow with assuming the lowest level of risk.

Amortization Calculator

You should certainly use a mortgage loan calculator for getting the precise amortization schedule for the different loans that you are comparing. You enter the three main variables from above -principal, interest and loan term. The tool will give you the complete schedule for the periodic payments broken down into interest amount and principal amount.

You will see three columns. The first one has the interest amount. The second one has the principal amount and the third one has the total amount. Usually, you will see a graph of how the different components change over time. You can readily use the mortgage calculator amortization data for doing a more thorough analysis. This analysis will be quite useful in the case of refinancing or taking out a second home loan.

Early Mortgage Payoff Calculator

You can use this tool to find out how much you will save by repaying your debt early. You can set a shorter repayment term to find out how your monthly payment will increase and how much interest you will save. Generally, you can change any of these three variables to figure out the best early payoff schedule for you. Just make sure that you add any fees which you may be charged for early mortgage payoff.

The mortgage calculator is a comprehensive and highly useful tool. It allows you to compare various products and to perform extensive analysis. Make full use of it using the above information and advice. If you have any questions or want more detailed professional analysis, you should not hesitate to turn to a professional financial counselor.

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