There are many different things to consider when buying or refinancing a home, and the right tools can help you get the best results. If youre just starting out, use a mortgage calculator to determine what loan amount and interest rate will make your monthly payments affordable.
What is a Mortgage Payment?
A mortgage is a loan from a bank or other financial institution that helps you buy or refinance a home. In exchange, you agree to pay the lender back with interest over a set period of time. The key components of a mortgage are the loan amount, interest rate and down payment.
Your mortgage payment consists of four costs: principal, interest, taxes and insurance (PITI). If youre only looking at the principal and interest portion of your mortgage payment, you might be significantly underestimating what youll need to spend each month.
Its not hard to make a mistake when trying to budget for your first home, or even if youre a homeowner looking for ways to save money. A mortgage calculator can give you an estimate of your total payment, but it can also show you how much you could save by making extra payments and reducing your interest rate.
Make a Down Payment on Your Mortgage
You can save more money by putting down at least 10% of the purchase price of your home. You can use a mortgage calculator to calculate how much of your monthly income you can put toward a down payment and how long it will take for you to pay off the loan.
Adjustable-Rate Mortgages, or ARMs, can be a good way to get the best deal on your home mortgage when rates are low. However, its important to remember that a change in interest rates could have a big impact on your overall monthly mortgage payment.
Before committing to an ARM, shop around for the best possible rates and terms. Compare at least four lenders to find one with the terms, choices and services that suit you best.
Mortgages are a substantial investment, so its important to make sure that you can afford to make your payments. By using a mortgage calculator, you can see how changes in your debt-to-income ratio, property location and home price will affect your monthly payments.
Choose a Mortgage Lender You Can Trust
The most common mortgage type is a fixed-rate mortgage. But you can also get a variable-rate mortgage, which often starts out with a lower interest rate than a fixed-rate mortgage. Choosing the right mortgage can help you save money over time, as long as you stick to your monthly budget.
Getting Your Credit Score Up To Par With the Market
Its important to get your credit score up to par with the market before you start searching for a mortgage. A good mortgage lender will be able to help you with this, as well as give you tips on how to improve your credit so you can qualify for the best loan for you.