Mortgage Calculators: Alternative UseMost people use a mortgage calculator to estimate the payment on a new mortgage, but it can be used for other purposes, too.
Here are some other uses:
- Planning to pay off your mortgage early. Use the "Extra payments" functionality of Bankrate's mortgage calculator to find out how you can shorten your term and net big savings by paying extra money toward your loan's principal each month, every year or even just one time. To calculate the savings, click "Amortization / Payment Schedule" link and enter a hypothetical amount into one of the payment categories (monthly, yearly or one-time) and then click "Apply Extra Payments" to see how much interest you"ll end up paying and your new payoff date.
- Decide if an ARM is worth the risk. The lower initial interest rate of an adjustable-rate mortgage, or ARM, can be tempting. But while an ARM may be appropriate for some borrowers, others may find that the lower initial interest rate won't cut their monthly payments as much as they think. To get an idea of how much you'll really save initially, try entering the ARM interest rate into the mortgage calculator, leaving the term as 30 years. Then, compare those payments to the payments you get when you enter the rate for a conventional 30-year fixed mortgage. Doing so may confirm your initial hopes about the benefits of an ARM -- or give you a reality check about whether the potential plusses of an ARM really outweigh the risks.
- Find out when to get rid of private mortgage insurance. You can use the mortgage calculator to determine when you"ll have 20 percent equity in your home. This percentage is the magic number for requesting that a lender wave private mortgage insurance requirement. Simply enter in the original amount of your mortgage and the date you closed, and click "Show Amortization Schedule." Then, multiply your original mortgage amount by 0.8 and match the result to the closest number on the far-right column of the amortization table to find out when you'll reach 20 percent equity.
Mortgage Calculator HelpUsing an online mortgage calculator can help you quickly and accurately predict your monthly mortgage payment with just a few pieces of information. It can also show you the total amount of interest you"ll pay over the life of your mortgage. To use this calculator, you"ll need the following information:
Home price - The dollar amount you expect to pay for a home.
Down payment - The down payment is money you give to the home's seller. At least 20% down typically lets you avoid mortgage insurance.
Mortgage Amount - If you're getting a mortgage to buy a new home, you can find this number by subtracting your down payment from the home's price. If you're refinancing, this number will be the outstanding balance on your mortgage.
Mortgage Term (Years) This is the length of the mortgage you're considering. For example, if you're buying new, you may choose a mortgage loan that lasts 30 years. On the other hand, a homeowner who is refinancing may opt of a loan that lasts 15 years.
Interest Rate Estimate the interest rate on a new mortgage by checking Bankrate's mortgage rate tables for your area. Once you have a projected rate (your real-life rate may be different depending on your overall credit picture) you can plug it into the calculator.
Mortgage Start Date Select the month, day and year when your mortgage payments will start.
Calculating Your MortgageWant to figure out how much your mortgage payment will be? Here’s a formula to help you calculate your mortgage payment manually:
- M = the total monthly mortgage payment.
- P = the principal loan amount.
- r = your monthly interest rate. Lenders provide you an annual rate so you’ll need to divide that figure by 12 (the number of months in a year) to get the monthly rate. If your interest rate is 5%, your monthly rate would be 0.004167 (0.05/12=0.004167)
- n = number of payments over the loan’s lifetime. Multiply the number of years in your loan term by 12 (the number of months in a year) to get the number of payments for your loan. For example, a 30-year fixed mortgage would have 360 payments (30x12=360)