4 Tips for Using a Home Mortgage Calculator
If you’re considering buying a home, a home mortgage calculator can be an excellent tool to help you decide on a price point that fits your budget.
You can input different variables, such as the length of the loan or your down payment amount, to see how it will affect your monthly mortgage payment. More advanced home mortgage calculators will factor in other expenses, such as insurance and homeowner’s association (HOA) fees.
When to Use a Home Mortgage Calculator
Buying a home is often the largest and most important purchase that you will make in your lifetime. Given the size of the investment, it’s important to feel confident that you’re making an informed decision.
A home mortgage calculator provides an estimate of your monthly payments and helps you determine how much to put into a down payment.
Here are four tips to keep in mind:
Tip 1: Gather All of the Relevant Information
One of the first steps before using a home mortgage calculator is to gather all of the following, relevant information, so that it’s easily accessible.
- The list or purchase price of the home.
- Your anticipated interest rate, which your lender may have indicated in your pre-qualification letter.
- The loan term, which is the length of time that you’ll have the mortgage loan for.
- Your gross income, including that of any co-buyers.
- Your monthly expenses, which should include fixed fees, like memberships, and estimates for variable costs, like groceries.
- Your down payment amount.
- Any other expenses or fees, such as HOA dues or mortgage insurance.
You can always estimate any of these figures, but keep in mind that the more accurate the information you put in, the more precise your results will be.
Tip 2: Look for Robust Calculators
The best home mortgage calculators do more than take just rate, term, and price into consideration. For instance, some will allow you to isolate annual income to help understand the annual earnings you need to afford a particular home. Others will account for property taxes by asking for your ZIP code or location.
When searching for a robust calculator, some of the additional inputs you’ll want to look for include, homeowner’s insurance, property taxes, private mortgage insurance, HOA fees, and closing costs.
Tip 3: Remember that Outputs are Estimates
No matter how good the home mortgage calculator is, the outputs are an estimate based on the information you enter.
In reality, when dealing personally with a bank or a lender, there is almost always some flexibility when it comes to your mortgage and loan programs. Use the home mortgage calculator as a starting point or a general guide in your home buying process, but always expect some variation in the terms and rates offered by your lender.
Tip 4: Verify Everything With a Lender
As with any large purchase, you should always shop around to ensure that you’re getting the best terms to suit your needs. The mortgage calculator will give you a good baseline to compare when shopping, however, the final numbers will be based on the lender you choose and the programs they offer.
When you’re ready to start your home search, we’re here to help. Get preapproved for a mortgage and find top local real estate professionals in your area.
