Using a mortgage calculator

Posted by AdrianRocker on January 19th, 2014

A mortgage calculator is a tool used mainly by prospective homebuyers to calculate their monthly mortgage loan payment, based on their principal, the number of years their loan will be amortized over, and the interest rate of various mortgage lenders.

The first element that homebuyers need to provide is the amount of money they need to purchase a property. This is also known as the mortgage amount and may vary from several tens of dollars to more than a million.

The higher the mortgage amount, the higher the mortgage payment. This amount can be reduced by making a down payment before actually purchasing the property. Another thing that can reduce the mortgage amount is the yearly income of the prospective homebuyer.

If the homebuyer does not have a salary that could cover a high monthly mortgage payment and the rest of his usual expenses, he would have to borrow a lower amount of money, and obviously, benefit from a lower monthly payment.

Another way of reducing the monthly payment is by increasing the mortgage amortization period. This can vary from one year to 35 years, depending on the age of the prospective buyer. As imagined, mortgage loans are not granted to very old people, who, due to obvious reasons, would not have the possibility to repay their debt.

The mortgage amortization period is the second element that prospective homebuyers need to fill out, if they want to verify their monthly mortgage payment. Mortgage loans are generally offered for periods longer than 10 years, to allow homebuyers to reimburse a decent amount of money.

The next element that has to be mentioned by a potential homebuyer is the interest rate of the mortgage lender he has taken into consideration. The most common mortgage lenders are banks and financial institutions. Their interest rates vary, that is why it is useful to use a mortgage calculator, to see what monthly mortgage payment is lower.

The final element requested by a mortgage loan calculator is the payment type. In most cases, homebuyers select to repay their debts monthly, but others want to get rid of their debt faster and choose a weekly or bi-weekly payment type.

After filling out all the required fields, all that the homebuyer needs to do is to press the "Calculate" button and check his mortgage payment. Since online mortgage calculators do not include some other expenses like mortgage insurance rates or property fees, it is recommended that homebuyers contact a reliable mortgage broker to provide them with accurate costs.

Mortgage loans scare people because they do not understand how their mortgage payment is calculated. Thankfully, today, prospective homebuyers have the possibility of using a very useful tool, named mortgage calculator, that allows them to see how much money they would pay monthly. To calculate the mortgage payment, they only need to fill out some fields, representing the mortgage amount, mortgage amortization period, interest rate and payment type. However, because mortgage loan calculators do not include other potential expenses that are related to a mortgage, it is preferable to contact a mortgage broker to get accurate details.