Tips For Getting A Mortgage
1) Dont be married to the lowest interest rate that you find. The bank with the lowest rate is not always the best choice.
2) Talk to an expert at your local bank or credit union.
3) Ask your friends who are homeowners about their experience with their lenders.
4) Consider 5- or 7-year adjusted rate mortgages , but make sure you know everything there is to know about them by speaking to a professional.
5) If youre working with a trustworthy real estate agent, ask their opinion.
Here are 5 great mortgage calculators to help guide you on your journey to homeownership. Most of these are very similar, but range in features and complexity.
This is one of the best mortgage calculators. Its highly detailed without having any ads for banks. You get a comprehensive breakdown of monthly payments and a detailed mortgage payment schedule for the amortization period .
Mortgage Calculators Dont Factor In All Costs
There are many different mortgage calculators available on the internet, but none of them factor in the complete costs of buying a house or remortgaging your home. By punching in basic info a calculator will give you:
â The total cost per month
â The total cost over the life of the mortgage
â How much you could borrow
But things like stamp duty, legal fees, mortgage fees and estate agent fees arenât factored into the total. These are the biggest upfront costs that home buyers have to cover. After that, there are ongoing costs to think about too, such as home insurance, council tax and everyday running costs.
If youâre serious about working out whatâs affordable, make a list of every cost, even down to the little things like removal vans and storage. Use online mortgage calculations as a baseline for figuring out your budget.
How To Calculate A Mortgage Payment
Under “Home price,” enter the price or the current value . NerdWallet also has a refinancing calculator.
Under “Down payment,” enter the amount of your down payment or the amount of equity you have . A down payment is the cash you pay upfront for a home, and home equity is the value of the home, minus what you owe.
On desktop, under “Interest rate” , enter the rate. Under “Loan term,” click the plus and minus signs to adjust the length of the mortgage in years.
On mobile devices, tap “Refine Results” to find the field to enter the rate and use the plus and minus signs to select the “Loan term.”
You may enter your own figures for property taxes, homeowners insurance and homeowners association fees, if you dont wish to use NerdWallets estimates. Edit these figures by clicking on the amount currently displayed.
The mortgage calculator lets you click “Compare common loan types” to view a comparison of different loan terms. Click “Amortization” to see how the principal balance, principal paid and total interest paid change year by year. On mobile devices, scroll down to see “Amortization.”
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How A Mortgage Calculator Can Help
Buying a home is the largest purchase most people will make in their lifetime, so you should think carefully about how youre going to finance it. Setting a budget upfront long before you look at homes can help you avoid falling in love with a home you cant afford. Thats where a simple mortgage calculator like ours can help.
A mortgage payment includes four components that together are known as PITI : principal, interest, taxes and insurance. Many homebuyers know about these costs but are not prepared for are the hidden expenses of homeownership. These include homeowners association fees, private mortgage insurance, routine maintenance, larger utility bills and major repairs.
Zillows Mortgage Calculator Includes Everything
- Look at the difference in monthly payments once everything is included
- The image on the left is simply the principal and interest payment
- While the image on the right is the full housing payment including insurance, taxes, HOA dues, etc.
- Make sure the calculator you use provides the complete picture to avoid any surprises
Next up in the search results was Zillows mortgage calculator, which included property taxes and homeowners insurance by default. To me this one was already superior because it included the full PITI mortgage payment.
One slight difference was that they calculated property taxes at a rather low 0.75%, as opposed to 1.25%. While it seems like no big deal, it could easily make or break a borrower.
Their homeowners insurance estimate seemed fairly accurate for me, in California, but I know other states, like Texas, have much higher rates. So again, the numbers can get thrown off pretty quickly here as well.
However, their calculator was much more intuitive with regard to PMI. If you entered in a 20% or higher down payment, it simply ignored PMI. If you put anything lower, it calculated it at around a half a percent, but also adjusted it based on loan amount and down payment.
Still, actual numbers can and will vary, so these are just estimates once again. Also, you might not have to pay PMI, even if putting down less than 20%, so it doesnt always apply.
It also ignores the possibility of PMI and HOA dues, both of which could be costly expenditures to ignore.
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The Power Of The Tool
Getting a mortgage calculator is usually for just about everyone, especially if this is your first time getting a loan. You dont have enough plans to pay off within your monthly financial budget. Holding a mortgage calculator is like having a knowledgeable local mortgage advisor who is very good at dispelling any doubts. Obviously, a perfect calculator is great, especially since the best calculator can easily help you improve your financial situation and, besides, your current lifestyle. While there are several calculators on the market, it is necessary to choose the one that will suit your events and help strengthen your financial situation. Contact us to get started today and we shall help you know more about these loan calculators.
Helpful Uses Of A Mortgage Calculator
Sometimes, if you plan to take out a new loan for home improvement or another loan, you can use a mortgage calculator to find out how the additional loan will affect your ability to pay off the loan in full. If you want to compare the impact of certain interest rates on your overall situation, the mortgage calculator can help.
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My Monthly Rbc Mortgage Payment Will Be
The mortgage amount is based on the qualifying rate of%.* The payment amount is calculated based on an interest rate of %.
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Enter your annual household salary. This includes your spouse/partner.
Consider car payments, credit cards, lines of credit and loan payments. This should not include your rent.
Enter the amount of money you plan to use as a down payment. Donât forget you can also leverage your RRSPs.
The Home Buyers’ Plan allows you to borrow funds from your RRSP to purchase your first home. Here are some of the key facts:
- You and your spouse can each withdraw up to $35,000 from your RRSP.
- The funds must have been on deposit at least 90 days before you withdrew them.
- At least 1/15 of the funds must be repaid each year, beginning two years after the funds were withdrawn.
- A signed agreement to buy or build a qualifying home is required.
- You can only participate in the program once.
Default insurance covers the lender in case of a failure to pay off the full mortgage amount. If your down payment is from 5-19%, a default insurance premium will automatically be applied to your mortgage.
Other monthly expenses you may want to consider include such items as alimony and condo fees .
Do I Qualify For A Mortgage
A mortgage calculator can be helpful when estimating your home buying budget. But remember even if you can afford the monthly payments, you still need to qualify for a home loan.
To see if you qualify for a mortgage, a lender will check your:
- : Borrowers with higher credit scores tend to have more loan options. But mortgages are secured loans, which means you dont always need stellar credit to qualify. Some lenders can approve FHA loans for borrowers with FICO scores as low as 580
- Loan-to-value ratio : LTV measures your loan amount against your new homes value. For example, borrowing $200,000 to buy a $200,000 home equals 100% LTV. Lenders can offer VA or USDA loans at 100% LTV, but not everyone is eligible for these programs. FHA loans cant exceed 96.5% LTV, which leaves 3.5% as the minimum down payment. Conventional loans can reach 97% LTV, meaning they allow a 3% down payment
- Home appraisal: A home appraisal identifies the homes value. Lenders wont approve loan amounts that exceed the homes value, regardless of the homes listing price or agreed-upon purchase price
- Personal finances: Lenders must verify your income to make sure you can afford the loan payments. Theyll check W-2s, bank statements, and employment records. If youre self-employed, a lender will likely ask to see tax records
You can ask for a mortgage pre-approval or a prequalification to see your loan options and real budget based on your personal finances.
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How A Mortgage Calculator Works
A mortgage is a loan that allows you to borrow money to buy a home and pay back the loan in monthly payments. The mathematical formula for calculating the monthly payments for a given mortgage loan amount is pretty complicated. That’s where a mortgage calculator comes in. A mortgage calculator does the math for you.
Mortgage calculators are great for quickly finding out the monthly payment for a particular home price or loan amount theres no need to try to do the math by hand. But there are two problems with mortgage calculators.
Problem 1: Many mortgage calculators only calculate the principal and interest payment.
Principal is the amount you borrowed and have to pay back, and interest is what the lender charges for lending you the money. Principal and interest make up the majority of a monthly mortgage payment.
But, principal and interest are not the only costs youll pay each month.
If youre using a mortgage calculator to decide how much you can afford to spend on a home, you may be significantly underestimating how much youll have to pay each month. Thats a surprise you dont want.
To make sure youre making decisions using the right numbers, do your own research to find out how much you can expect to pay each month for homeowners insurance, property taxes, and mortgage insurance. Add those monthly amounts to the principal and interest payment from your mortgage calculator to find out how much you can expect to pay for your total monthly payment.
But Bottom Line Ignore The Mortgage Calculators
You can play around with them if you like just know what youre getting into, and what theyre actually for. If youre serious about buying a home, talk to an actual human for a much more accurate idea of what you can actually afford. And remember the golden rule: If its on the internet, assume you cant entirely trust it.
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Only As Accurate As Your Information
The final issue with using an online mortgage calculator is that they are only as accurate as the information you provide them with. This becomes a problem when you try to figure out your mortgage amount before working with a professional. You wont know the final purchase price until one has been agreed upon, and you wont know what interest rate you qualify for until you have a professional run the numbers.
At GVC Mortgage, we see nothing wrong with using an online mortgage calculator to give yourself a rough estimate so you can start budgeting. And, in fact, we have one on our website! However, when you are ready to start the homebuying process, we encourage you to contact our office and work with one of our professionals. We can answer all your questions and get you a more accurate number to work with. Contact us in Indianapolis today at 564-4906.
About Carla Jackson
But To Use One Correctly You Will Need To Accurately Fill Out Fields In The House Payment Calculator With The Following Information:
- The homes purchase price
- A down payment amount you can afford
- Interest rate
- The loan term
Once you enter this information, the mortgage calculator will tell you the amount of your monthly payment, which is a total of principal and interest costs.
But you need to remember that mortgage calculator amounts are only as accurate as the inputs you provide. Do your research ahead of time to determine the current interest rates and be honest about how much of a down payment you can afford.
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When To Use A Mortgage Calculator
Buying a house will probably be the most important investment youll make. Use a house payment calculator as a research tool before house hunting. It will help you set your price range and determine how much house you can afford based on your monthly income.
Some mortgage calculators will even tell you how much income you need to earn to qualify for a home loan.
These figures will help you decide if you can afford your target home price. Knowing how much of your monthly household budget you can realistically spend on your dream house is a smart and responsible start toward your financial goals.
That Online Mortgage Calculator Is Probably Lying To You
Seriously, what is the point of these things, beyond building up our dreams to crush them?
If youve ever at least had a passing interest in buying a home, youve probably tried to use one of those mortgage calculators online to see how much of a home you can actually afford. And holy crap, do they suck! Takethis one from CNN, for example. Go ahead, plug in a few numbers. Does it make any sense whatsoever? Is it in any way even vaguely helpful for it to tell you that you can afford double what any reasonable, ethical financial adviser says you can?
What use, then, are these things to anyone? And why do they usually suck so hard? We calculated some noticeably more accurate answers.
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What About Calculators For Specific Homes
Zillows popular Zestimates, which people tend to view as almost an appraisal of a homes value might not accurately value a particular home because of this records issue or it might not recognize improvements made to a home, like adding an extra bathroom or it might not have a lot of data to work with for neighborhoods that dont have a lot of recent home sales.
Its probably not a coincidence that algorithms lowball the value of specific homes, or that calculators spit out a low number by omitting crucial information. Again, its not unfair to assume its all for marketing purposes. Every retailer ever in human history knows that its good business to advertise low prices and stupid to advertise anything else it gets the customer in the door, or clicking around on your website. Once a customer lands on the spider web, its game on for a realtor, lender or any kind of salesperson.
How Much House Can I Afford On My Salary
Want a quick way to determine how much house you can afford on a $40,000 household income? $60,000? $100,000 or more? Use ourmortgage income calculatorto examine different scenarios.
By inputting a home price, the down payment you expect to make and an assumedmortgage rate, you can see how much monthly or annual income you would need and even how much a lender might qualify you for.
The calculator also answers the question from another angle, for example: What salary do I need to buy a $300,000 house?
Its just another way to get comfortable with the home buying power you may already have, or want to gain.
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Redfins Mortgage Calculator Is My Favorite
- The Redfin mortgage calculator seems to be a solid choice
- I found that it provided a more accurate estimate of taxes and insurance
- And it pulls HOA dues from the property listing page into the calculator automatically
- But its not perfect because they may lowball mortgage rates in some cases
I recently revisited this post and wanted to add the Redfin Mortgage calculator to the mix.
Ive always felt that Redfin had more up-to-date and accurate property listing information relative to other real estate websites.
They seem to factor in recent home sales more quickly than Zillow, which leads to more accurate estimated home values.
And it appears that their loan calculator is also more on point. For example, I ran one home purchase scenario through both Zillow and Redfin and the results were night and day.
On a hypothetical $999,000 home purchase with a 10% down payment, Redfin came up with a total payment of $6,204 per month, while Zillow had a monthly payment of just $5,511.
Thats a difference of roughly $700. Not small potatoes by any means.
Again, the culprit was property taxes and homeowners insurance, which were both way underestimated by Zillow.
Additionally, Redfin automatically pulled HOA dues from the property listing and inputted them into their calculator.
While still not perfect, largely because they seem to lowball mortgage rates, it still feels like the best option out there at the moment from the big players.