A mortgage payment calculator may seem quite simple. And, indeed, a basic calculator is easy to use. Just enter the loan amount, interest rate and term — and voila, this online tool can figure out the associated monthly mortgage payment. That’s helpful information for anyone who is shopping for a loan to purchase a house or refinance an existing mortgage.
More payment calculator variables
Beyond that, mortgage payment calculators can become complicated, but also offer borrowers more information.
For example, a calculator might offer a way to add property tax and homeowners insurance expenses or mortgage insurance premiums to the monthly payment. Or, it might allow you to figure out the effect of making a larger payment every month, making an extra payment once a year or making a lump-sum payment.
Other functions can help borrowers understand adjustable-rate mortgage, or ARM, payments, biweekly payments or blended-rate or interest-only payments. Some calculators offer a built-in amortization schedule that shows all of the payments, divided by principal and interest, until the loan is paid off.
Mortgage payment calculators can also help borrowers figure out whether they might be able to get rid of mortgage insurance or weigh whether an ARM would be worth the risk compared to a fixed-rate loan. To understand the added risk of an ARM, use the calculator to compare the initial, fully amortized and highest possible payments to the payment on a comparable fixed-rate loan.
Types of mortgage calculators
Other types of mortgage calculators also can be helpful. Examples include calculators for: rates and points, a 15-year or 30-year term, a balloon payment, an annual percentage rate, a maximum loan amount and whether to refinance, among others.
It’s important to remember that any type of mortgage calculator is only as good as the data entered into its fields. Only when the right loan amount, interest rate, term and other information are entered can the calculator return accurate results.