Doing Your Homework: Using a Mortgage Calculator

by Karen Lawson
Loan Page Columnist

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You're shopping for a new home loan and think you need a math genius to do the numbers for you. How much interest will you pay? What will your monthly payment be? These and other questions are important to answer when you're looking for a mortgage. Luckily, the Internet provides easy access to information, including information for homebuyers.

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Free mortgage calculators can be great tools for estimating how much you can afford to borrow, and how and when your mortgage will be paid off.

What is a Mortgage Calculator?

Mortgage calculators are available on mortgage lending websites. You enter the information requested, and receive the answer instantly. Mortgage calculators provide a variety of information, including:

» Amount of monthly principal and interest payment
» Amortization schedules (this shows how much of each payment is applied to principal and interest)
» Savings based on loan term (example: savings if you get a 15 year mortgage instead of a 30 year mortgage)

By entering the requested information, you can determine what your mortgage payment (principal and interest only) will be according to the amount you borrow and the interest rate on your loan.

Telling the Truth and Nothing But

Before you do the math on the loans you're considering, it's important to do your own numbers. You can use mortgage calculators to determine how much mortgage you can afford. Some websites offer extensive information that will help you figure out how much homeownership will cost you--there are expenses associated with homeownership that are easily overlooked by first time homebuyers.

Mortgage calculators are meant to provide estimates only. They cannot anticipate individual circumstances. Remember, when using a mortgage calculator, honesty is the best policy. What comes out of a mortgage calculator depends on what you enter! Mortgage calculators can supply valuable estimates for getting a new home loan and planning your budget.

Sources
Fannie Mae

About the Author
Karen Lawson is a freelance writer with more than fifteen years of experience in mortgage lending. She earned an MA degree in English from the University of Nevada, Reno.

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