When you decide to buy a home or refinance a mortgage, there are a number of tools at your disposal. You can go online and use such tools as a mortgage loan calculator to find out how much your monthly mortgage payment will be based on set criteria. These calculators will vary but with the right information, you can get a pretty accurate account as to what you will pay each month based on the home purchase price, interest rate and loan term.
How Does a Mortgage Calculator Work?
A mortgage calculator works by taking specific information and calculating the outcome with that info. When you have the price of the home, along with down payment, loan term and interest rate, algorithms are used to configure the payment you will make each month. As the homeowner, you can use this tool to determine how much a mortgage payment will be if you were to purchase a particular home.
Of course your lender can help you with this information, but calculators come in handy when you are searching for homes during the evening hours or weekends. You can input the information you have on hand to get an estimate as to what your monthly payment will be. Once you find a home you are truly interested in, your lender will be able to figure the true payment based on the information you have provided in the pre-approval or application process.
What Should a Mortgage Calculator Include?
A quality mortgage calculator will include certain criteria to be able to give you an accurate reading. The following criteria should be covered so you can get as close as possible to the actual monthly payment.
- Home Price—this information is important and should be the actual price of the home as listed or what you would be offering.
- Down payment—this number would be the money you would put down as part of the purchase.
- Loan term—this information will be the length of your loan. In Canada, most terms are five or ten year time frames, but other options are available.
- Interest rate—this number should be what your lender has suggested to you as your approved interest rate or the current market rate.
- Property tax—this information is needed for an accurate monthly payment. If you do not know the amount, make an estimation.
- Home Insurance—this number may also be unavailable to you. Speak with your lender or insurer to see what value you could assign for an estimate.
Overall, this information will give you an idea as to what your monthly payment will be. However, you will need to speak with your lender in order to know the exact amount your mortgage would be if you purchased a particular home. At Mortgage Guys, we offer accurate calculations so you know exactly how much you owe and what your monthly payment will be with your new mortgage. Let us use our skills and experience to find you a new home mortgage perfect for your budget and family needs.