Mortgage Calculator: Figuring Out What You Can Afford
Buying a home is a huge investment, and the decisions you make now could haunt you for a long time, 30 years to be exact. Before you enter into any mortgage agreement, you should know what type of home you can afford and be familiar with loan terms and how they affect the repayment of the loan. At the very least, you should have a good idea of what kind of payment you can realistically afford each month. Be sure to calculate insurance and land taxes into the payment as well.
A mortgage calculator is a great tool that you can use to see how much you can realistically afford. Before you start punching numbers into a calculator, however, you need to have a budget. To create a realistic budget, keep a notebook with you and jot down everything that you spend. Include bills, restaurant tabs, transportation expenses, entertainment, etc. Track everything for an entire month. This will give you a realistic budget. You may be wondering why you canít simply write down your bills and formulate a budget that way. You can, but you will probably leave out daily expenses that will affect your ability to make your mortgage payment.
After you formulate a budget, use a mortgage calculator to see what you can afford. If you think you can afford a $700 monthly payment, enter this amount into the payment field of the calculator and it will then automatically fill in the other fields so that you can see how much you can borrow. Remember: be sure to allow for expenses that will be tacked to your mortgage payment. Your payment could end up being hundreds of dollars more than what you figured with the calculator after you add on land taxes and insurance payments.
You should always use a mortgage calculator when shopping for a home. It can help you compare the cost of buying different homes which will help you immensely during the selection process. A calculator can also give you all of the information that you need regarding a loan and may prompt you to seek more favorable terms.
Whenever you shop for a new home, you should shop for a new home loan as well. Gather as many loan offers as you can and compare each using a loan calculator. Doing your homework can save you a lot of money and heartache in the long run. Think about this: a difference of only 1.5% interest on a 30 year, $100,000 will cost you $39,980 in interest over the course of the loan. Itís your money. Use a mortgage calculator to learn how you can hold onto more of it.
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