Use a free mortgage calculator to work out your monthly payments
October 17th, 2011
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A mortgage calculator is an outstanding tool that makes your home buying procedure simpler. You can use a mortgage calculator to work out the approximate monthly mortgage payment on a loan. Thus, these tools can help you fix your “comfort zone” for monthly mortgage payments.
Various websites offer mortgage calculators that you can use without cost.
To work out your mortgage payment comfort zone, you require three things: a home price, a budget and a free loan calculator. For the home price, simply begin with the price of a house that you’re keen to buy.
Initially, you shouldn’t bother about whether the price is excessive – you would see that shortly when you run the figures through a free mortgage calculator.
Subsequently, enter the home price into a free loan calculator at existing market rates for a 30-year FRM (fixed rate mortgage). You might select another type of mortgage afterwards, but the purpose is to get an approximate mortgage payment on the basis of home price. Therefore, you select the 30-year fixed rate loan for the benefit of simplicity.
You can find a variety of free mortgage calculators on the Internet. Simply type “free mortgage calculators’ into any popular search engine and you would get many.
To make the process of calculating mortgage payments more understandable, let’s take an example. Suppose you’ve found a home in a favorable location with the number of rooms you need and providing the facilities that you’ve dreamt of at a price of $200,000. You want to take out a loan for 80% of this amount and subsequently divide the left over 20% between a down payment and a second mortgage.
If you wish to work out how much your monthly payments would be on $160,000 (80% of $200,000), just enter the numbers into a free mortgage calculator.
In the “principal” field, enter 160,000. In the “interest rate” field, enter 5.75%, which is the existing market rate when this article was written. Most mortgage calculators would have this area filled in based on the existing market rates. In the “number of years” field, enter 30. Press the “calculate” button and you would get the following result:
Your monthly mortgage payment for a 30-year FRM loan amount of $160,000 at an interest rate of 5.75% is $933.72.
You can enter the above mentioned figures into more than one free mortgage calculator to confirm. You can perform this procedure once again for your second mortgage amount. Obviously, if you can manage to make a down payment of 20% and stay away from the second mortgage situation, the calculations would become easier.
Now you can find out whether this payment fits your budget or not. This is a fast and simple technique to find if you’re in or out of your comfort zone. A free mortgage calculator can benefit you in this way.