Use a mortgage loan calculator
A mortgage loan calculator can be a great way for you to estimate the cost of a monthly mortgage payment before actually applying for a loan. It's important to understand the investment and cost of a home mortgage before immersing yourself in the daunting task of finding and applying for a mortgage.
So what exactly is a mortgage loan calculator? It's a tool that allows potential homebuyers to enter some basic data about their upcoming home purchase and in turn get an approximation of what their monthly mortgage payment could be.
Before using a mortgage loan calculator you will need to determine the following:
- What will be your principal or the amount of money you will need to borrow in order to purchase your potential home? If you are looking to buy a $350,000 home and you have $50,000 as a down payment, your principal is $300,000. When using the mortgage loan calculator you would input this information when asked for the "principal" or "mortgage" amount.
- Usually, a home mortgage is amortized over a 30-year period, but there are other options as well. Decide how many years your loan will be amortized before entering this information into a mortgage loan calculator.
- Next is entering your interest rate, which will vary depending on your credit score and the type of loan you're applying for. You can find interest rates posted all over mortgage Web sites, yet because there are so many mortgage plans available only the most common ones are usually posted. Enter an interest rate for a 30-year fixed mortgage for a general estimate.
- Know your mortgage start date. This is the date you plan to start making payments on your new home.
After you enter all your information, the mortgage loan calculator will calculate an estimated monthly mortgage payment. The number that's calculated is just for the mortgage payment; this doesn't include insurance, taxes and other fees included in the purchase of your home. Remember that your housing payment shouldn't exceed 31 percent of your income.
A mortgage loan calculator can be helpful when trying to assess how much you can afford when purchasing a home, but it's also important to speak with a professional before settling on a loan agreement.
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