Why you should use a mortgage calculator

You've finally found the perfect home of your dreams. However, the Realtor did say it was listed for more than you wanted to spend. Can you afford it? Consult a mortgage calculator to find out.

In decades past, only real estate professionals had access to mortgage calculators, making homebuyers vulnerable to what the professional said you could afford. Today, thanks to the Internet, everyone can access a mortgage calculator.

Mortgage calculator math

Mortgage calculators not only tell you what payment you can afford today, but they also predict how much your payments will go up if you have an adjustable-rate mortgage.

You can also use a mortgage calculator to forecast how much you will pay over the life of the loan.

For example, using Bankrate's mortgage calculator, you'll discover that purchasing a home for $150,000 at a rate of 4.6 percent over 30 years will cost you $768.97 in principal and interest as part of your monthly mortgage payment.

After five years, you will have paid more than $33,000 in interest and at the end of the loan, your house will have cost you $276,827.96.

A quick change of the terms to a 15-year mortgage reveals that you will pay $207,930.76 at a 4.6 percent interest rate, saving you over $68,000 in interest over the life of the loan.

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