Simple Mortgage Calculator - Estimate Your Monthly Payment

Purchasing a home is an amazing decision, and not one to make too easily. It can help you considerably to learn how much home you can afford before you go house shopping. The rule is simple: get the best mortgage you can, but do not take on so much mortgage that you struggle to make the payments each month. When you find the best mortgage for your needs, you can make the payments comfortably without worrying about making ends meet.

For many people, though, it is hard to imagine what amount they can afford. Can you afford to purchase a $250,000 home, or should you stick with the $150,000 range? Before calling your real estate agent, take the time to consider how much home you can afford. A good place to start is a simple mortgage calculator that figures the monthly payment of the loan you are getting.

Gather Your Numbers First

Before a mortgage calculator can really give you answers, you have to know a few things, starting with your budget. Here are some questions to answer:

1. What is your reliable monthly income? If you are paid different amounts each month, find the average for your monthly income.
2. What are your stable monthly bills? Think of things like your car payments, your cell phone bills, and other bills you may have. Total them.
3. What are the projected costs of things like utilities for the home you are considering purchasing?

This gives you an idea of what your budget should be. Don't forget to calculate gas and food costs as well, and budget for entertainment, credit cards, and savings. Once you have this information down, you can begin looking for answers about your ability to pay a mortgage.

Using The Mortgage Calculator

Now that you have a basic idea of how much money you can put toward a mortgage, you can use a simple mortgage calculator to find the best monthly payment for your needs. A mortgage calculator helps you gauge the approximate monthly cost of the loan you are looking for. Here are a few examples.

Let's say the current rate for mortgage loans in your credit range is 7 percent. You know you want to consider a 30-year mortgage loan, one of the most popular choices available today. Later, you can change these terms to see how they affect your ability to purchase a home as well. For now, here are some examples for you. When you use a mortgage calculator, you can enter this information.

Then run another calculation like this one to see the difference when purchasing a home at a different price:

Do this several times with your mortgage calculator to compare the cost of the loans you can obtain. For many, the goal will be to find the right range for their budget. You can clearly see how much home you can afford by seeing where your monthly budget puts you and how the loan works out for you.

Play With The Numbers Before You Decide

With the help of a mortgage calculator, you can find out just how much home you can afford. Can you only make a payment of $1100? If so, then based on the same terms and interest rates listed above, you'll want to start looking for a home in the range of $160,000 to $170,000. You may also want to consider changing other factors in your home loan estimates. Here are a few more things to take into consideration. Use the mortgage calculator to get more answers.

Use the mortgage calculator to compare the monthly cost of a loan at a 20-year or 40-year term against the 30-year term. This shows you the difference per month and helps you determine the right cost of a home if you lengthen or shorten the term. (Remember that the longer you hold the loan, the more you will pay in interest on the home in total, even if the monthly payment is lower.)

Also use the mortgage calculator to look at different interest rates and how they affect your ability to make the mortgage payment every month. Just a few percentage points can make a considerable difference. The 7 percent listed may run a bit higher for those with a lower credit score, and you may qualify for a lower cost if your credit score is better. Of course, interest rates change all the time, so this number needs to move to accommodate that difference.

When you use a mortgage calculator, you can see exactly what purchasing a home will cost you. For many people, the benefit is being able to afford more home than they thought. For others, it pays off by keeping them from dreaming of a home that is too far out of reach. Use a simple mortgage calculator to find the right affordability for your budget. Help yourself be an educated home buyer by using these facts to get the best loan on a home you can completely afford. It will make buying a home much simpler for you.