What is a Mortgage Calculator?

mortgage calculator

How much can you afford?

This type of calculator is used to determine how much you can afford to borrow. By using this type of calculator you can determine your monthly mortgage payment. Based on what type of interest rate on our mortgage and term of your mortgage.

Step 1:

Using a mortgage calculator is knowing if your interest rate is fixed or adjustable. The difference between a fixed rate is that your monthly payment won’t change and an adjustable rate means that your payment could change after you get your loan.

 Step 2:

Second you will need to know the amount you will be borrowing for the loan amount.  This figure should not include any down payment you plan to make. If you are refinancing your home, and only want to borrow the same amount as your current loan you would enter that figure.  If you don’t want to bring cash to closing for any closing costs or prepaid items, you would enter a higher amount to cover those fees and essentially roll them in.

Step 3:

Next you’ll want to choose the desired length, or term of the loan. Most people who purchase a new home opt for a 30 year term to keep their payments as low as possible, but shorter terms are usually available for a purchase or refinance.

Step 4:

When it comes down to deciding your interest rate keep in mind your credit score and other factors may determine how much a specific rate will cost.  You will want to check rates and see what best fits you.

Step 5:

Lastly, you want to pick a mortgage start date, or date of your first payment. This date is generally two months after you close on your loan.  But you could enter in the date you anticipate to close if you are unsure when your first payment will be.

By using a mortgage calculator you can find out how much time any extra payments will shave off the term of your loan. Or how much interest you could potentially save over time.  By using a mortgage calculator you can predict what your mortgage payment will be. As well as the amortization schedule by entering in a few key pieces of information.

-Melody Williams

Processor at Box Home Loans

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