Many Americans have a dream of one day owning their own home. Purchasing a home is likely to be the largest investment ever made by the average consumer, with the average home in America costing over $200,000. It is very unlikely to have enough cash around to buy a house outright, and therefore many first time homebuyers use a mortgage to finance their home. A mortgage is really nothing more than a loan to buy a house, but there are seemingly countless terms, conditions, and factors that are all part of a modern mortgage. In previous times, it would be very difficult for the average home buyer to attempt to calculate the terms of a purposed mortgage on his or her own. However, with the recent technology of the internet, it its now as easy as typing in a few numbers and clicking go.
The internet has now brought easy mortgage calculators to anyone, anywhere, and anytime. An online search for "mortgage calculator" will bring up thousands and thousands of free tools to help plan a mortgage. The calculators available include simple and fast calculators, and even very accurate complex calculators. Modern online mortgage calculators can deliver almost all of the information you need to know about a possible mortgage, including:
Your qualified mortgage amount
Possible monthly payments with different configurations of rates and principals
The effect of changes of certain mortgage variables
An amortization chart, which shows your future payments and your progress towards paying off the principal
Comparisons of different mortgage maturities
Whether refinancing is beneficial or not
The amount of total interest paid
The effect on the interest rate of pre-payments or discount points
The typical information that you will need to input into a mortgage calculator varies. The simplest calculators that can provide you with estimates generally require:
Annual interest rate
Starting date of the mortgage
Repayment period or mortgage term
Amount borrowed
The more complex, but also more accurate mortgage calculators will request many more figures to input. Some of the most common are:
Interest rate cap if applying for an adjustable rate mortgage
Rate of interest if refinancing a loan
Index rate adjustment
Lender's margin added to the index rate
Time interval between index rate adjustments
Current index rate
Closing fees
Recording fees
Title insurance
Credit score
Lender fees
Origination fees
Discount points
Months remaining
Monthly or annual real estate tax rates
Private mortgage insurance
Annual homeowner's insurance
Price of home
There are also several types of specialized mortgage calculators, each with a specific purpose available online. Some of these types include:
Interest-Only Mortgage Calculator
This calculator is specifically for consumers applying for an interest-only mortgage. It will calculate the interest payments, as well as the principal after the termination of the introductory period.
Balloon Mortgage Calculator
This is a tool for determining monthly payments and outstanding balance when the balloon payment matures and the loan is due.
Amortization Calculator
An amortization calculator will provide a timeline of when interest and principal will be paid off according to a certain monthly payment.
Fixed Rate vs. Interest-Only Mortgage Calculator
This calculator will simply provide a comparison between monthly payments on a fixed rate versus an interest-only mortgage.
Adjustable Rate Mortgage (ARM) Calculator
This tool will calculate the amount of future mortgage payments, after the interest rate on an adjustable rate mortgage has begun to rise.
Refinance Interest Savings Calculator
This calculator will determine if it is beneficial to refinance a current mortgage at a lower rate. It will provide information such as monthly payment savings and the time to recover closing costs and achieve the break-even point.
Monthly vs. Bi-weekly Mortgage Payments Calculator
As the name suggests, this calculator will determine the amount of money that can be saved by making bi-weekly payments instead of monthly payments.
Cash-out Refinance Calculator
The cash-out refinance calculator will determine the possible savings of consolidating debt from credit cards and other loans into a new mortgage.
Fixed vs. Adjustable Rate Mortgage Calculator
Looking at how payments stack up beyond the introductory period is important when deciding between fixed or adjustable rate mortgages, and this calculator will make that easier.
Mortgage Term Comparison Calculator
This will calculate how either increasing or decreasing the term, or the length of the loan, will affect your mortgage.
APR Mortgage Calculator
This tool will determine the annual percentage rate (APR) of your mortgage.
With all of these mortgage calculation tools available for free online, planning a mortgage to buy a home is now easier than ever. It only takes a little bit of time to determine which type of mortgage and which terms are right for you. If you have dreams of owning your own home, the first step is to begin researching with the mortgage calculators that are waiting online for you.
By: Wesley Fina
