The Benefits of Shopping Around for the Best Rates With a Mortgage Calculator
Shopping Around for the Best Rates with a Mortgage Calculator
With mortgage interest rates still relatively low compared to historical highs, it’s more important than ever to shop around for the best rate. That’s because not all lenders offer the same terms and benefits, and higher rates can mean higher monthly payments for homebuyers.
A Mortgage Calculator is a calculator that takes into account a variety of different factors to determine your monthly mortgage costs and estimate what you can afford. This includes things like your down payment, loan term and interest rate as well as additional expenses like property taxes, homeowners insurance and HOA fees.
The Benefits of Shopping Around for the Best Rates with Using a Mortgage Calculator
The first and most obvious benefit is that it can help you budget your mortgage costs. Unlike an amortization table, which estimates the total amount of principal and interest you’ll pay over time for a particular loan, a mortgage calculator will show you how much you can actually afford to spend on a home with a specific loan type.
It can also help you figure out if you can make a bigger down payment, which will reduce your total cost of owning the home over time. A mortgage calculator can also provide you with a more accurate picture of how much you’ll need to spend on closing costs, which are typically about 3% to 6% of the purchase price of your new home.
A mortgage calculator can also help you decide if it’s worth paying discount points to lower your interest rate. The calculator will tell you how many months it would take for discount points to pay for themselves, as well as the monthly mortgage payments and net interest savings from the lower rate.
In addition, a mortgage calculator can help you decide how to split your down payment between the down payment and monthly mortgage payments. The calculator will allow you to add a down payment to the loan balance, which could decrease your monthly mortgage payments by lowering your interest rate or by increasing the length of your loan term.
The calculator can also include a section for other homeowner expenses, such as property taxes and private mortgage insurance (PMI). These numbers are optional but can be helpful in giving you an idea of what your overall monthly payments may look like once all of these additional costs have been included in your calculation.
Another benefit of a mortgage calculator is that it can help you compare the cost of a loan with a number of other loan options. If you want to save money on your new mortgage, it’s essential to compare loans based on their total cost, including lender charges, credit, and closing fees.
A recent Freddie Mac study found that borrowers who shopped around for their mortgage loan and got quotes from three or more lenders saved about three times as much as those who shopped with one lender. The Freddie Mac study also found that getting multiple quotes from different lenders increased the likelihood that a borrower could secure a lower interest rate.