One of the easiest ways to budget for a new home mortgage loan or refinance is through proper planning. A mortgage calculator allows you to use a variety of factors to calculate mortgage payments and total interest. Let’s look at the factors used by a mortgage calculator.
Mortgage Balance
when you start using a mortgage calculator, you’ll need to know the amount of money you are financing. If you have a mortgage currently, this is likely the amount you owe on your home. If you are purchasing a new home this will be the purchase price plus closing costs minus your down payment. Closing costs include the cost of the attorney, loan origination fees, and any additional fees like appraisals, surveys, home inspections, etc. Unsure about these items, add 5% to the amount financed as an estimation.
Mortgage Interest Rate
One of the critical factors in determining monthly payments is the interest rate. This can cost you tens to hundreds of thousands of dollars over the course of the loan. Origination fees are fees added to the principal balance of the loan in exchange for a lower interest rate. This is generally not a good idea because this fee can never be recovered regardless of when you pay off the loan.
Mortgage Term
The amount of time you have the loan financed for is the mortgage term. This can vary based on your needs. The shorter the time period the less you will pay in interest. A 15 year note is equal to 180 months.
PMI, Taxes, and Home Insurance
Some mortgage calculators allow you to include estimated taxes, insurance, and private mortgage insurance (PMI). These are not required in many cases, but are helpful in the event that you will be making escrow payments or PMI. PMI is required in many cases where you are not putting a minimum of 20% as a down payment.
Output
This information will calculate the amount of your monthly payment and total amount of interest you will pay over the term of the loan. The output is also displayed in a printable amortization table outlining the breakdown of the principal and interest charged on each payment and the amount owed after each payment has been made.
LoanCalculatorTools.com provides a free home loan calculator to help with planning your next home loan or refinance. Use our free home refinance calculator to calculate your refinanced mortgage payments.