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Using a Mortgage Calculator to Manage Your Debt & Protect


The mortgage calculator is a financial tool that lets you enter information about your home, loan terms and interest rate to determine your monthly payment. You can also try out different inputs and see how your payments change with a variety of options.

Your Debt-To-Income Ratio
To qualify for a mortgage, lenders want to know that you have the disposable income to make your payments each month. They use your debt-to-income (DTI) ratio to calculate how much of your gross monthly income you can afford to spend on housing expenses, and then subtract recurring, fixed debt obligations such as credit card payments and minimum mortgage payments from your total household debts.

A good rule of thumb is to keep your DTI below 43% and to avoid any lingering debt, including student loans, medical bills or credit cards, that have high interest rates and can eat up too much of your monthly income.

Paying Down Your Mortgage
If you have a home loan, paying it down slowly over time is a smart strategy to save money on interest and build equity in your property. A mortgage calculator can help you determine how long it will take to reach your goal of a completely paid off mortgage.

You can also use our mortgage calculator to find out how much your monthly payment will be if you pay it off faster, and what that would mean for your overall savings and wealth profile.

Your Down Payment and Principal Amount
The amount you put down at closing represents your share of the homes value. You can choose to put down anywhere from a low percentage of the purchase price up to 20 percent. This will lower the total loan size, so its important to figure out what your down payment needs to be before you start shopping for a house.

Your Loan Type
A mortgage calculator can show you how different loan types compare, and how they will affect your monthly payments and interest costs. For example, a 30-year, fixed-rate loan has lower payments than a 15-year loan, but it will cost you more in interest over the life of the loan.

If youre buying a home, youll probably have to make payments through an escrow company. This organization will hold your earnest money, deposit the down payment at closing, and pay your property tax and homeowners insurance on your behalf.

Using a Mortgage Calculator
Once youve determined how much you can afford to borrow, its time to shop around for the best loan. This can be a confusing process, as the loan terms and interest rates vary significantly from one lender to another.

You may be able to secure a better interest rate and loan term if youre willing to shop for lenders in your area. By comparing multiple lenders, you can find the best offer for your budget and your lifestyle.

A Mortgage Calculator is a valuable tool for anyone looking to buy or refinance a home. It allows you to calculate your loans costs and monthly payments in detail so you can make an informed decision on whether to buy or refinance.

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