4 uses of mortgage calculators
Mortgage calculators are powerful tools that help you with a lot more than just estimating your monthly payments. Scroll down to take a look at all the uses of mortgage calculators.
- If you are buying a home for the first time, you probably have no idea about how much you should offer for a house. Mortgage calculators can help you out during this initial but crucial stage. You can use this tool to compare and estimate the monthly payment for different houses. By changing the price of the home in the loan calculator, you can understand if the house is within your budget or exceeds it.
The affordability calculator can also help you out with this. You can also use a mortgage calculator to see the impact of making a higher down payment, and how this will affect your budget. A higher down payment will lower your monthly payments and also may help you qualify for a lower rate of interest. In some cases making a down payment of about 20% of the home’s purchase price will help you avoid paying for private mortgage insurance(PMI). A mortgage calculator’s payment breakdown will show you exactly where your money is going. You can track how much of your money is going towards paying the principal, and how much of it is for the interest.
Thus, you get to see the total amount of interest included with every installment. You can also use these calculators after you start repaying the loan to understand your performance, and to know what changes you can make to pay the loan quicker. The 30-year fixed loan will generally have the lowest payment amount, but it may have the highest rate of interest. The interest rate for 5/1 ARM loans are much lower than a fixed rate loan, but the rate of interest can change every year. With the help of a mortgage calculator, you can determine which type of loan will work best for you.
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