The Importance Of Using A Mortgage Calculator
Monday, November 13, 2006
Before stepping outside to go house hunting, you should find
out how much you can afford. If you dont know what you can
afford then it is a waste of your time, as well as a realtors
time, to even go looking at houses. Knowing how much you can
afford will enable you to spend your time looking at only those
houses in your price range.
If youre not ready for the stress and overwhelming amount of
information that comes from dealing with a lender, then using a
mortgage calculator to provide you with a rough idea of how
large a monthly payment you can afford is a great option.
Using a mortgage calculator is simple. Before you start, make
sure you have the following information handy: your total
income, savings, and monthly debts. If your spouse or another
co-borrower will be on the loan, then you also need to compile
this information for them as well. Once youve gathered this
information, you are ready to start.
The first thing you need to do is fill in your income, which is
your gross income and not your actual take-home pay, then your
savings, and then your total monthly debt. Remember not to type
in the commas. Most online mortgage calculators will add these
for you.
The next thing you need to do is select an income period. If
you typed in what you make annually, then select annual. If you
typed in what you make monthly, then select monthly. And so on,
and so forth.
What you input in as savings in a mortgage calculator should
include all of the money that you will have to cover closing
costs and also make your down payment. This can also include
any gifts that you may receive from relatives.
The monthly amount of debt that you input should include such
payments as student loans, car loans, mandatory child support,
and/or credit card payments. However, be aware that you should
not count credit card payments if you pay off your balance each
month without ever owing interest. Debts such as your current
housing expenses, such as your rent or mortgage, should not be
included the mortgage calculator.
When you come to the option for the interest rate, you can
either choose the default value or input your own. Be aware
that a mortgage calculator wont produce accurate results if
you use a rate on a 15-year loan or on a one-year ARM. The
default value given is based on the current 30-year fixed rate
with only one point.
Lastly, when you arrive at the results screen, there will be
options that allow you to override some of the parameters you
gave in order to recalculate. Included are the minimum required
down payment percentage and also other parameters that are not
user-specific on the initial screen. The former is beneficial
because many people today are purchasing houses with no money
down.
The results you get from using an online mortgage calculator
will most likely not be accurate; however, they can provide you
with a firm base from where to begin shopping from. Though it
can be a hassle, as well as a bit time consuming, it is always
best to consult a lender and get pre-approved for an amount you
can afford. In the end, you will have to take this step anyway,
but in the beginning a mortgage calculator can be a great tool
that helps you begin the long process of owning a home.
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posted by Dennis Cheesman @ 5:50 AM,
