Mortgage Calculators

If you’re in the market for a new mortgage, using an online mortgage calculator is a great way to determine what kind of terms you can expect to see and how they’ll affect your home purchase. Visualizing what a 3.9% interest rate looks like can be difficult, which is why a mortgage calculator is so useful – it shows you exactly what a certain mortgage will do to your finances. Here are just a few ways that you can use an online mortgage calculator to learn more about your mortgage needs and find the mortgage that is best for you.

Start With A Solid Set of Sample Data

In order for your mortgage calculator to be of any use, you’ll need to start the calculations with a set of sample data that is a fairly accurate representation of what you can expect to find in the market. For example, if your gross annual salary is $30,000, you won’t want to look at mortgages for $1 million homes (unless you’re doing so out of idle curiosity). Instead, try to represent your actual take-home earnings and interest rates available to someone with your credit as faithfully as possible.

Try Adjusting The Settings And Terms

Once you have your sample data and have done a quick initial calculation, you’ll want to play around with some of the settings and terms to see how minor changes in your mortgage arrangement can affect your finances.

For instance, what happens if you keep your monthly payment the same but increase your interest rate? What happens if you change your 15% down payment to 20% and you suddenly don’t have to pay mortgage insurance? When you understand how all of the different variables impact both each other and your monthly payments, you’re in a better position to judge what kind of mortgage is a good fit for you.

Survey Multiple Lenders And Input Their Terms

When you use your mortgage calculator, you’ll want to avoid simply using one mortgage plan from one lender. Different lenders can vary in their mortgages available and can offer you different terms, which will impact your monthly payments and possibly even what kind of home you can afford. So shop around and use different terms from different lenders – this has the dual effect of both helping you understand how mortgages work and saving you some rate shopping time later.

Online mortgage calculators are an easy way to learn how mortgages work, but you’ll want to enlist the help of a professional mortgage advisor when it comes time to choose a mortgage and a lender. Contact your local mortgage professional today to get expert home buying advice.

Are you in the market for a new home? If you plan on using mortgage financing to buy your next home you’ve likely heard the phrase “loan-to-value” or the acronym “LTV” before. Let’s take a quick look at the loan-to-value ratio including why it’s important, how to calculate it and how it can affect your mortgage.

What is the Loan-to-Value or LTV Ratio?

In short, the LTV ratio is a number that compares how much money you owe against your home with its resale value in the marketplace. A low LTV ratio indicates that you have far more equity in your home than you owe in mortgage payments; conversely, a high LTV ratio indicates that you owe almost as much as your home is worth.

Calculating your LTV ratio is easy. Simply divide the amount that you have (or will have) remaining in your mortgage by your home’s value. For example, if you own a home worth $250,000 and you still owe $150,000 on your mortgage, the calculation would be $150,000 divided by $250,000, which gives you a LTV ratio of 0.6 or 60 percent.

Why is the LTV Ratio Important?

Your LTV ratio is important for a number of reasons. First, your mortgage lender will use this figure as part of their risk calculation when they assess your financial suitability for your mortgage. If you’re only putting 5 percent of the purchase price in as a down payment you’ll have a LTV ratio of 95 percent, which is a more risky loan than one with a LTV ratio of 30 percent and thus will almost certainly come with a higher interest rate.

If you have a LTV ratio higher than 80 percent and you’re getting a mortgage from a conventional lender you’ll also be required to pay for private mortgage insurance or “PMI”. Although PMI rates generally sound quite low – in the neighborhood of 0.5 to 1 percent – they can add hundreds of dollars to your monthly mortgage payment. Note that PMI may not apply to you if you’re seeking out a government-backed mortgage from Veteran’s Affairs, the USDA or the FHA.

While the LTV ratio might seem simple, this number can affect your mortgage in a variety of ways. Contact your local mortgage advisor today to learn more about the LTV ratio and to have your questions answered by an experienced professional.

Are you thinking about using a mortgage to buy a new home? Buying your own piece of local real estate is a major financial investment and one that can require some pretty complex math to fully understand.

In this blog post we’ll discuss mortgage calculators and how to use one of these tools to determine your monthly mortgage payments, interest charges, amortization periods and more.

Determining Your Principal and Down Payment Amounts

To get started with a mortgage calculator you’ll need to know how the price of the home and how much you intend to contribute as a down payment. Generally speaking you’ll want to place a down payment of at least 20 percent in order to avoid having to pay for private mortgage insurance and to give you access to better interest rates.

Choosing Your Interest Rate and Amortization Period

Now that you have an idea of the amount of mortgage financing you’ll need, the next step is to choose your interest rate and amortization period. Different lenders will offer different interest rates for every one of their mortgage products, so again you’ll want to play around with these numbers and run the calculation to see which combination of mortgage financing, interest rate and amortization period gives you a monthly payment that suits your budget.

Using a Mortgage Calculator for Refinancing

If you’re thinking about refinancing your current mortgage you can also use a mortgage calculator to help make the math a bit easier. Simply use your outstanding mortgage balance as the principal amount and then choose an amortization schedule that fits your financial goals. Be sure to keep an eye on your interest payments, as you may find that by refinancing to a longer amortization period your monthly payments go down but your total interest paid is quite a bit higher.

Don’t Forget the Closing Costs

Finally, don’t forget that there are numerous “closing costs” – fees, taxes and more – which you’ll need to factor in to your overall calculation. Closing costs will include everything from home appraisal fees to government filing fees and property taxes, and will vary depending on the home and the city or community you’re buying in.

While online mortgage calculators can handle the tricky math to determine monthly payments and interest costs you may still find that you have questions about your mortgage or some aspect of the process. For more information, contact your local mortgage professional and they’ll be happy to share their advice and expertise.