Sunday, January 18, 2009

Understanding The Home Mortgage Calculator

Contrary to popular belief, home mortgage calculators do not wear suits and ties and sit behind an abacus all day trying to determine how much a potential homeowner's mortgage payment is going to be. Although in the early days of banking that may have well been the case, in today's electronic age home mortgage calculators can be found online to help people find out if they can afford that new house or not. Many of the better ones will also allow them to enter much more information other than the homes financial information and help them design a budget to make the new home purchase affordable.

Entering in the price of the house, including taxes and insurance as well as the number of months of the loan and the interest rate will return a monthly payment amount. Additionally, most home mortgage calculators will allow for input of a down payment, where different amounts can be entered to show how adding a couple of thousand to the down payment will trim dollars from the monthly payment. Playing with the variables allows a potential home buyer to look at all the options quickly and easily, helping them determine if purchasing the home is a viable option. The only real problem with using mortgage calculators to calculate a monthly payment is the interest rate that particular user may be paying. If something in their past gives them a lower credit score, they will need to know how much they will be charged to make the figures more accurate.

Some potential home buyers will use home mortgage calculators and believe the result is set in stone when the reality is that the lender will have the final say on the amount of the monthly payment. One lender may charge a person one interest rate and another lender, using different criteria, may charge more or less interest. Before looking to buy a new house it may be beneficial to contact a lender and find out what you will probably be charged for a new home loan. With this interest rate in mind a more accurate number can be squeezed out of mortgage calculators, when all other information is accurate. The homeowner may also use mortgage calculators to find out if a fixed rate mortgage will save them money in the long run over an adjustable rate.

By using home mortgage calculators different scenarios can be entered to determine the best financing route to take for individual buyers. By playing with the numbers a potential buyer can help decide if they can afford the investment at that time.

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