Using a Mortgage Calculator to Get an Accurate Picture of Long-Term Costs
When you’re considering purchasing a home, getting an accurate picture of long-term costs can help you make smart financial decisions. Mortgage calculators can show you how much your payments will be, depending on the factors that you input.
Your monthly mortgage payment depends on a number of different factors, including the home price you choose and your down payment. Your loan term, property taxes, homeowners insurance and interest rate also can affect your monthly payments.
How to Use a Mortgage Calculator
The best way to get an accurate idea of your mortgage payment is to enter some basic information about the home you’re interested in. Once you’ve entered your home price, down payment and mortgage interest rate, you can see how your monthly payments will work out by clicking the “Calculate Your Payment” button.
Our mortgage affordability calculator is a tool that can help you figure out how much house you can afford based on your income, debts and credit score. It will also let you estimate your PITI, which is the total amount you’re required to pay on your mortgage each month.
A PITI should never be more than 43% of your gross income. It should include your principal and interest, property tax, insurance and condo or homeowner association (HOA) fees if you have them.
Using a mortgage calculator is the fastest and easiest way to get an accurate estimate of your monthly mortgage payments, but it’s important to be aware of some common mistakes that could cause you to end up paying more than you should.
1. Don’t assume you will get a mortgage at the advertised rate, which may be higher than what you’re actually able to get.
2. Don’t assume you’ll be able to avoid private mortgage insurance, which can cost you a lot of money in the long run.
3. Choosing the right mortgage lender can make all the difference in your financial future.
4. Getting your finances in order before you start looking for a new home is the best way to save on mortgage costs and get the home you want.
5. Using a mortgage calculator can help you decide what type of home you can afford and determine whether you can afford to make a larger down payment.
6. Buying a home can be stressful, but a mortgage calculator can help you understand what your financial situation is and how to make the best decision for your family’s long-term needs.
7. Find out when to get rid of private mortgage insurance
The magic number that allows you to request that your lender waive your private mortgage insurance is 20 percent equity in your home. Unless you have this much equity, you’ll need to pay a fee each month on top of your mortgage payment.
A mortgage calculator can also help you figure out when to take advantage of lower interest rates, which are often available to first-time home buyers. Depending on the type of mortgage you’re looking at, these rates can range from 0.5% to 2% lower than the standard interest rate for the same loan term.