Buying a home is one of the largest financial transactions of one’s life. And how you finance it should not be a snap decision. Setting a budget upfront, long before you look at homes can help you avoid falling in love with a house that you can’t afford. This is where an online mortgage calculator can help you.
A mortgage payment includes four components, including principal, interest, insurance, and taxes. Many homebuyers know these costs, but what that they are not prepared for are the hidden costs of homeownership that include homeowners association fees, routine maintenance, private mortgage insurance, larger utility bills, and major repairs.
A mortgage loan calculator Texas helps you to know how much home you can qualify for based on these factors. Besides, you can use the tool for other purposes too. Here are some alternative uses of the calculator –
Planning to pay off your mortgage early
Use the “Extra payments” functionality of an online home loan calculator can help you to find out how you can condense your term, as well as net big savings through paying extra money toward the principal of your loan each month, every year, or even just one time. In order to click the savings, click on the “Amortization/Payment schedule” link and enter a hypothetical amount into one of the payment categories (monthly, yearly or one-time) and then click on “Apply extra payments” to see how much interest you will end up paying and your new payoff date.
Decide whether an ARM is worth the risk
The lower initial interest rate of an adjustable-rate mortgage, can be alluring. However, while an ARM may be appropriate for some borrowers, others may find that the lower initial interest rate won’t cut their monthly payments as much as they think. If you don’t have an idea of how much you will really save initially, try entering the ARM interest rate into the mortgage calculator, leaving the term as 30 years. After that, compare those payments to the payments you get when you enter the rate for a conventional 30-year fixed mortgage. Doing this may confirm your initial hopes about the advantages of an ARM – or give you a reality check about whether the potential plusses of an ARM really overshadow the risks.
Know when to get rid of private mortgage insurance
You can also use an online mortgage calculator for determining when you will have 20 percent equity in your home. This percentage is a magic number for requesting that a mortgage lender wave private mortgage insurance requirements. Just enter the original amount of your mortgage and the date you closed, and then click “Show Amortization Schedule.” And then, multiply your original mortgage amount by 0.8 and match the result to the closet number on the column of the amortization table to know when you will reach 20 percent equity.
These are some of the alternative uses of an online mortgage calculator. So, if required you can use the calculator for these purposes too besides knowing how much home you can afford. So, get started today!
Author Bio: Joan Gallardo, a Senior Loan Officer, with 20+ years of experience, here writes on 2 questions to ask the best mortgage lender in Houston when you are about to choose one of the first time home buyer programs in Houston.