Are you in the process of buying your first home? Or do you already have a house but would like to refinance it? If you'd like to figure out your monthly payments before jumping into anything too quickly, keep reading to learn about using a mortgage calculator and how it can help you plan for your home loan.
What is a Mortgage Calculator?
According to chase.com, a mortgage calculator is a tool that finds the approximate amount for your monthly mortgage payment. A mortgage calculator offers personalized loan recommendations.
How to Use a Mortgage Calculator
The first thing you need is to collect the following to receive an accurate estimate:
- Down payment amount
- Where the property is located, and what type of property it is
- Price of the home
- Monthly taxes, HOA fees, and insurance
- Personal information, such as birthdate
- Credit score
Now that you've collected the necessary information follow these simple steps to learn how to use a mortgage calculator.
Type of Loan
The loan type is one of the very first decisions you'll have to make. Luckily, there are only a few options to choose from:
You'll choose this option if you're buying a home or condo.
This option is for people who want to replace their current mortgage with a new loan.
If you wish to access your home's equity, you will pick the cash-out refinance option.
Home Price/Current Property Value
If you need to know the price of the home you want, then check out their property listing or the most recent appraisal.
If you plan on buying a home, you'll want to enter the amount of the down payment you plan on making.
Home Loan Goals
When learning your home loan rates, keeping your home loan goals in mind is essential. When choosing the right home loan, keep these options in mind:
A low-interest loan offers the lowest possible interest rate, regardless of how long the loan lasts.
Steady Monthly Payment
If you want to maintain the same interest rate for the entirety of the loan, then choosing a loan that boasts a regular monthly payment is an excellent decision for you.
This type of loan allows you to begin your loan with a lower interest rate. Eventually, the interest rate will transition to an adjustable rate.
Lowest Monthly Payment
This type of loan offers the smallest payment possible. Unfortunately, this also means that you'll most likely be paying longer loan terms.
There are several choices regarding the type of property you can purchase. Some properties come with lower or higher interest rates, and some companies don't cover every property. If you're unsure what kind of property you're looking at, check out these options to see if your property falls under one of them:
- Single-family home
- Two family home
- Three-family home
- Four-family home
Now that you've entered your information into the mortgage calculator, you should get an accurate estimate of how much your monthly payment will be. If your payment is too high, adjust some of your information to make the cost more suitable for your needs.
As you can see, getting an estimate for your mortgage is easy. If you still need to learn how to use the mortgage calculator, ask an agent for help, and they should be more than happy to assist you. Other than that, keep these tips with you, and you should be well on your way to a new mortgage for a brand-new home. So, what are you waiting for? Get an estimate today!