Mortgage Calculator
When buying a home, it’s best to start with a clear idea of how much home you can afford. A home mortgage calculator can help you determine that. A mortgage calculator can also help you compare home mortgages offered by different lenders to find the best deal, and verify that a lender’s figures are accurate. There are many mortgage calculators on the Web.
In its most basic form of a fixed term, fixed interest rate mortgage, a mortgage calculator accepts your inputs of the home price; annual percentage rate of interest on the loan (APR); the number of years the loan is made for; and the number of payments per year. Then it tells you how much your monthly payment will be.
A reverse home mortgage calculator accepts your input of a maximum payment you can afford; APR; years; and number of payments; and tells you the maximum home price that you can buy. This information is useful when you go shopping for a home; you can tell the Realtor or Web site your price range.
An amortization mortgage calculator shows how much of your monthly payment goes towards interest and how much goes towards reducing the principal – the amount actually borrowed. Most amortization schedules are front-end loaded. That means that early in the repayment schedule, most of your payment goes towards interest and very little towards reducing principal. That’s important because interest is added to the amount you still owe each month based upon the remaining principal.
You can reduce the total amount of interest you pay on a mortgage loan by paying a little extra each month, or whenever you have cash to spare. Some mortgage calculators let you input the amounts of such extra payments and show how much money you could save that way.
Adjustable rate mortgages do not use the same interest rate throughout the entire term of the loan. Simple mortgage calculators can’t deal with that scenario. An adjustable rate mortgage calculator lets you see how your monthly payment will change, and how much total interest you will pay, if the interest rate changes to a new rate at a particular time during the loan period. This can help you avoid unpleasant surprises like a “balloon payment” in the third year of your mortgage that turns out to be much higher than you can afford.
Mortgage calculators are offered on the Web and as desktop programs you can download. Some are Excel spreadsheets that you can tinker with if you are adept in Excel programming. Some mortgage calculators are offered by lenders who want your contact information in return, while others are given away free of charge with no strings attached.