Mortgage Payments Calculator: How They Make The Home Buying Process Easy

Cash buyers are very rare nowadays especially when it comes to making big purchases such as a house. This is why easy payment schemes are available for those who can only afford to pay off the item slowly over time. Houses are probably one of the biggest investments anyone would make in their lifetime.

It is also a purchase that we don’t often make which is why it is essential to do certain calculations before closing the deal. Knowing just how much we need to pay per month, and the term most suitable for our budget can help greatly in the buying process. This is where a mortgage payments calculator comes in.

 

 

What Does A Mortgage Calculator Do?

 

A mortgage payments calculator is an essential tool for buyers who wish to purchase a home. It can effectively calculate how much buyers can afford to borrow on an investment property. Mortgage calculators can help determine important elements to a loan such as the interest rates, payment schedules, costs, length of the mortgage, and principal payments. The great thing about the calculator is that everything is automated. Buyers won’t have to stress themselves out by making calculations themselves, or by having to go to the bank and ask for calculations. Plus, mortgage payments calculators are available online, so you can get the figures that you need with just a few clicks of your mouse.

 

Some Hidden Benefits of the Mortgage Calculator

 

Aside from finding out your loanable amount, there are other benefits that a mortgage calculator can offer you. Below are some of the extra perks that many people don’t know of:

 

Extra payments

 

Mortgage calculators happens to have an “extra payments” calculator, which helps you understand how much savings you’ll be incurring if you decide to pay more than your monthly amortization. Before dishing out your hard earned cash, you can already have an idea what’s in store for you by shortening the term of your loan. In order to find out your potential savings, just enter an amount into any one of the payment categories such as monthly, yearly, or one-time. Then click on the button “Show/Recalculate Amortization Table” and you’ll then see your new terms, how much you’ll save, and how much interest is left for you to pay.

 

Testing ARMs

 

Adjustable Rate Mortgages or ARMs can offer lower rates for you in the beginning, but it can be tricky at the same time because your interest rates can go up at the time when you are least prepared. In order to calculate your tolerance to risk, and more importantly, if you can still make payments even in the worst case scenario, you can again use the mortgage calculator. First of all, enter the interest rate of the ARM and set the term to 30 years. Then, compare your possible payments with a 30 year fixed loan. This can also help you determine whether it is a better decision to go with the ARM or if it’s wiser to stick with the regular 30 year fixed loan.

 

There isn’t just one calculator available for use. Other calculators include the debt consolidation calculator, cost calculator, repayment calculator, borrowing calculator and the buy to let mortgage calculator. Each of these serve their own particular purpose not only for the buyers, but for landlords and even for creditors.

 

These mortgage calculators can often be found on the web pages of mortgage lenders such as banks, credit unions and other financial institutions. Because of these automated tools, calculating your mortgage and estimating just how much money you will need is made so much easier.

 

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  • This is one of the critical first steps in deciding to buy a home or not–even if you have the down-payment saved, you still need to make sure that your monthly cash flow can accommodate the entire mortgage payment, taxes, PMI (if applicable), and general maintenance (plus condo fees if you purchase one!).

    I've heard of people who run out and purchase a home after receiving a windfall, only to end up losing the home later down the line because they couldn't actually afford the month-to-month expense over the long-term.

  • Juan /

    Taxes are also a major part of a home purchase that should be examined before hand. US property taxes can be quite high and it is not uncommon to have an extra 3k or 4k tax bill at the end of the year because of that house that was recently purchased.

  • YFS /

    Good point. My property taxes are 5k a year. Definitely not something that should be taken lightly.

  • YFS /

    This is why I always recommend people buying homes based on net income and not gross income. I have a post lined up about debt-to-income ratio's and how the bank see's you as a borrower. Do you have any other tips for first time home buyers?

  • Here's a good idea: use a mortgage calculator to determine the amount of your new home, then save the difference between rent and this amount every month to see how easily you can handle the payment. As Juan said, remember taxes (and insurance costs) as well.

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  • Mortgage Payments Calculator: How They Make The Home Buying Process Easy…

    Cash buyers are very rare nowadays especially when it comes to making big purchases such as a house. This is why easy payment schemes are available for those…

  • Another great use for a mortgage calculator is to play with different purchase prices to see the swing in monthly mortgage payment. It helps you set a shopping range ahead of house hunting.

    If you do have cash to play with for closing, it can also help you to assess how various down payments will effect your payments.

  • YFS /

    good tip! I actually used your tip when buying our first home.

  • Andrea /

    I would also suggest to new home buyers to stay comfortably within your budget, don't max it out. Was watching that property virgins show on HGTV and crinching at a girl who found a house OVER her budget and her preapproved mortgage and then went to her parents to borrow more money. Not a smart plan!

  • Mortgage Payments Calculator: How They Make The Home Buying … | Mortgage /

    […] calculating mortgage payments – Google Blog Search « Who Else But the Fed Will Rescue Real Estate? – Huffington Post Reverse Mortgage […]

  • […] A mortgage payments calculator is an essential tool for buyers who wish to purchase a home. It can effectively calculate how much buyers can afford to borrow on an investment property. Mortgage calculators can help determine important elements to a loan such as the interest rates, payment schedules, costs, length of the mortgage, and principal payments. The great thing about the calculator is that everything is automated. Buyers won’t have to stress themselves out by making calculations themselves, or by having to go to the bank and ask for calculations. Plus, mortgage payments calculators are available online, so you can get the figures that you need with just a few clicks of your mouse.Source: yourfinancessimplified.com […]

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