If you’re in the market for a new home or to refinance your mortgage, it can be an exciting time! It can also be a time of uncertainty. How do you know how much you can afford? What about how much money you should put down?
A mortgage calculator can answer these questions and more to help you make the home buying process as simple as possible.
What is a Mortgage Calculator?
A mortgage calculator helps you understand the monthly payment based on the amount of money you want to borrow. It also helps you see how a down payment can make a difference in your payment and the overall interest charges, and how different interest rates affect your payment and budget.
If you haven’t used a mortgage calculator yet, check out the top benefits of using one.
The Top 10 Benefits of Using a Mortgage Calculator
You can see your monthly mortgage payment
Guessing how much your mortgage payment will be isn’t enough. A mortgage calculator can tell you to the final detail how much your monthly payment will be. With information like the sales price, down payment amount, interest rate, real estate tax amount, and homeowner’s insurance premium, you can get a detailed breakdown of your monthly payment.
If it’s higher than you anticipated, you can play with the numbers whether lowering your interest rate, making a larger down payment, or trying a different loan program.
It’s easy to compare interest rates
When two lenders give you different interest rate quotes, it can be easy to just go for the lower rate. What if that’s not in your best interest, though? A mortgage calculator will tell you not only how much your monthly payment will be, but how much interest you’d pay over the life of the loan based on the loan terms including whether it’s fixed rate or adjustable.
You can compare 15 and 30-year terms
Most people automatically choose a 30-year mortgage. It seems like the most attractive option and is the least expensive. But, with a mortgage calculator, you can see the true cost of the 30-year mortgage.
When you compare it side-by-side to a 15-year loan, you may decide to budget for the 15-year term and save thousands of dollars on interest. Without the mortgage calculator, you might not realize the vast savings a 15-year term offers and may just take the 30-year term paying more money than necessary.
Mortgage calculators make budgeting easy
Adding a mortgage payment to your budget can feel overwhelming. You may know the estimated cost of the payment after talking to a lender, but what about when you find a specific property? A mortgage calculator can help you instantly know how much your payment would be by inputting the home’s real estate taxes, average homeowner’s insurance premium, and any HOA dues required.
You can see how extra payments help you save money
If you’re thinking about making extra payments on your mortgage, a mortgage calculator can help you see the difference. Even if you can only afford $100 extra per month, it may feel like nothing until you look at the numbers.
Using a calculator meant for mortgages, you can see how much you’d save in interest charges and how much faster you’d pay off your mortgage with even small extra payments each month.
You can save time
If you’re still on the fence about how much you want to spend on a home, you can save time using a mortgage calculator versus calling your mortgage lender every time you come across a home that you aren’t sure if you can afford.
Putting the numbers in yourself, you’ll see the payment and know right away if you’ll get approved if you’ve already been pre-approved by a lender for a specific payment amount.
A mortgage calculator can help you choose the right down payment
If you aren’t sure how much you want to put down on your home, a mortgage calculator can help. Play with the numbers starting with the minimum down payment required up to the amount you have to use.
You can see the difference it makes in your payment and overall interest charges to help you decide if you should invest the money upfront or keep it in your reserves in case of an emergency.
Mortgage Calculators are Portable
You can use a mortgage calculator anywhere including while you’re looking at a house. Whether you’re at an open house and need to decide fast or you just want to see if a house you’ve stumbled across fits in your budget, using a mortgage calculator on your phone takes only a few seconds to use!
You can learn how much to save
If you’re just thinking about buying a house but aren’t sure how much money you must save, a mortgage calculator can help. Playing around with the numbers you can see what different down payments will do for your payment to help you qualify for a loan.
Be an informed borrower
Getting a mortgage can feel overwhelming especially with so many new terms thrown at you. With a mortgage calculator though, you’ll be ahead of the game. You’ll know how much your principal and interest payments will be. You’ll also know your escrow payments, how the down payment affects your loan, and how different interest rates affect your payment.
If you’re ready to buy a home, use a mortgage calculator to help you make decisions. Just following a pre-approval from a lender can cause you to spend more than you wanted. Knowing what you can afford ‘in real life’ versus just on paper is important.
Use a mortgage calculator to see your true payment and the total cost of a loan. It can help you make big decisions like how much to put down on the home, what type of loan to take, or even what term is right for you.