mortgage

5 borrowers who need a mortgage calculator

An online mortgage calculator can be a valuable financial planning tool. Here are five types of consumers who can benefit from using Bankrate's calculator to chart their next mortgage move:

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1. Renters thinking about buying.

Renters thinking about becoming owners often wonder whether it is cheaper to rent or buy. A mortgage calculator can help them estimate how a hypothetical mortgage payment would compare to the rent they're paying now. However, don't forget that the mortgage payment may include other costs (such as annual taxes and insurance) that are not included in the calculator total.

2. Homeowners looking to refinance.

Homeowners considering a refinance can use a calculator to figure what their new mortgage payment would be at current interest rates. To find rates for your area, use Bankrate's mortgage rate search. Plug that interest rate into the mortgage calculator, along with the amount you still owe on your mortgage. This will give you an idea of what your new payment would be.

3. Homebuyers wondering how much they can afford.

Affordability is key in today's uncertain economy. A mortgage calculator can provide a valuable reality check for homebuyers who've fallen in love with a house on the upper end of their price range. As a general guideline, your monthly mortgage payment should not exceed 28 percent of gross monthly income. The calculator can help you determine whether the likely payment for that dream house stays within this guideline.

4. Homeowners thinking about a cash-out refinance.

Homeowners with large amounts of equity may qualify for a cash-out refinance. But just because you can use a cash-out refinance to consolidate various types of debt doesn't mean you should. Plug in the amount of the mortgage you're considering and the likely new interest rate and the calculator can help you decide if a cash-out refinance fits into your budget.

5. Homeowners looking to get rid of private mortgage insurance.

The amortization schedule calculator included in Bankrate's mortgage calculator can give you an idea of how much equity you currently have in your home. Most homeowners who achieve 20 percent equity can request a waiver of the PMI requirement from their lender. Taking a look at the amortization schedule produced by our mortgage calculator, along with a few simple calculations, can help you find out when to leave PMI behind.

Bankrate has more information about how to use mortgage calculators.

 How to use the mortgage calculator.

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