When buying a home and signing a mortgage, you want to make sure you are making informed decisions. Fortunately, there are countless tools to help you find a home, find a lender, and get you settled in a new home.
One of the best tools for homebuyers is an online mortgage calculator.
They are pretty simple to use. Input a few factors, and you’ll receive some solid information within seconds. Things like expected home price, loan amount, down payment amount, interest rate, and loan term are all input in the calculator. The algorithm uses all of these data points to reveal your total loan amount and your monthly mortgage payment.
Here are four benefits of using an online mortgage calculator:
1. Find your price range.
Home prices can vary greatly depending on the location, market conditions, and time of year. How much home can you afford? An online mortgage calculator will allow you to play with home prices and mortgage amounts to identify how much you can afford. Knowing your price range will make looking at homes easier and keep you from overextending yourself financially.
2. Decide your down payment.
While you’re inputting different loan amounts and home prices, you’ll see how your down payment will affect your monthly payment. While some loans (like FHA loans) require as little as 3.5% down, a smaller downpayment will typically require you to carry private mortgage insurance. This can increase the amount you have to finance and, subsequently, increase your monthly payment.
3. Set your monthly budget.
Buying a home impacts your cashflow in monumental ways. Chances are your home will be one of the biggest expenses you have each month. Knowing how much you’ll be paying on a mortgage every month will allow you to monitor your money and make sure that you are covered. An online mortgage calculator will let you know if you have enough income and if you need to start saving sooner.
4. Determine your loan type and terms.
Loan amounts are important but so are loan terms. Most of the time you’ll have to choose between 15- and 30-year terms. An online mortgage calculator will be able to show you the difference this will have on your total mortgage amount. The same calculator will help you decide whether to pursue a conventional, FHA, or VA mortgage. Each has its benefits.
An online mortgage calculator can be a helpful home buying tool, but it’s no substitute for expert advice and guidance. That’s where First Lenders steps in. Call us today for more information!