How to Use a Web Based Mortgage Calculator
The process may vary per application, but generally, this is how it is done. When you get to the site, you will see fields for mortgage rate, years to pay and loan amount. Other calculators may have more fields. Enter the appropriate information.
The loan amount is the principle you have borrowed for buying the house. The mortgage rate is the rate for which the money is being borrowed. This is annually, and usually set between 5 to 10%.
This is assuming the rates are fixed; the figures will differ if the rates are variable. The years to pay will be either 15 or 30 years.
After you have entered the figures, you can begin to calculate mortgage payment. Press the calculate button. The figures will appear.
Other Facts to Consider
If the mortgage has points, you have to total the points from the mortgage. For example, if the mortgage is $75,000, plus 2%, it will be $1,500 or $76,500. You should also take into account other charges like the bank fees, inspection and other miscellaneous costs. Make sure you account for these figures.
An adjustable rate is suitable only if you are staying at the place for a few years. It is hard to calculate to maturity because the future rate cannot be determined.
You can get an idea by totaling the points and the total purchasing cost. For instance, a 5 year, 6% adjustable mortgage with a 2% fee would be calculated as follows: 2% /5 = 0.4%. 6% +0.4 is equal to a 6.4% mortgage.
Graduated Payments and Others
When you calculate mortgage payments, keep in mind that prepayments, bimonthly payments and graduated payments have no effects on the mortgage rate. However, those extra payments have an effect on the mortgage term.
They help lessen the principal amount. This will reduce the years one has to pay. For instance, an additional yearly mortgage payment can reduce a 30 year mortgage to about 19 years.
Refinancing is ideal if the rate is 1.25% lower than the one you are paying now. If you decide to refinance, make sure you close the current deal properly. There may be fees, charges and paperwork to be worked on. Ensure everything is done legally and processed thoroughly.
Tips and Warnings
A fixed rate mortgage is the most suitable because you know how much you have to pay. But do keep an eye on the rates. If a better one comes up, you should refinance. Make sure you compare all the offers before agreeing to it.
Using a Web calculator, you can easily calculate mortgage payments. However, you also need to think of the rates and your tenure too. Take all these things into account and your mortgage situation will be easier to grasp.