Using Mortgage Calculator Tools

By Karen Lawson
LoanPage.com Columnist

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Mortgage lending websites provide free online calculator programs that can help you determine how much house you can afford, payment estimates based on loan amount and interest rate, and whether it's a good time to refinance. You can also learn about mortgage amortization and other important aspects of getting a mortgage loan.

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Plan Ahead Before Looking for a New Home Loan

Ideally, you'll do some research before you start looking for a home and a new home loan. Mortgage calculator tools can help you compare mortgage products and consider various scenarios based on loan amount, interest rate, and asking price. You'll want to know exactly how much you earn, and your monthly expenses. Standard mortgage underwriting considers income to debt ratios as part of the approval process. If you have too much debt, you can make decisions about how to reduce spending, and which debts to pay off in preparation for qualifying for an appropriate mortgage loan.

Credit Risk Can Cost Extra

"Subprime" mortgages are available to people who cannot qualify for traditional mortgage financing. In some cases, it may be advisable to delay buying a home until you can rebuild a bad credit history. If you're ready to buy a home, you may be offered a "low or no documentation" mortgage. Mortgage calculator tools can help you see how the annual percentage rate, or APR, of different loan options can vary. The APR expresses the cost of a mortgage loan--including the interest rate, points paid to buy down the rate, and certain lender charges--as an interest rate. The APR is disclosed on a Truth in Lending (TIL) form and allows you to more easily compare the same loan between different lenders. This information is legally required to be provided by mortgage lenders, and can help you select a mortgage that doesn't have excessively high fees and costs.

About the Author
Karen Lawson is a freelance writer with extensive experience in mortgage banking. She holds BA and MA degrees in English from the University of Nevada, Reno.

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