Online mortgage calculator
An online mortgage calculator can be used to determine how much property a potential borrower can afford for s conventional loan. Refinance mortgages will usually come with a better interest rate for standard home loans. The person’s total monthly income and total monthly debt payments will be used to determine the total debt to income figure for the lender. A mortgage calculator can assist in calculating all sources of income and comparing them to all monthly debt payments. When calculating the monthly debts, don’t forget to add the taxes, insurance and homeowner association dues. Additionally, properties that are in a flood zone, will require flood insurance and that is a figure that will need to be included. Lenders prefer that the total mortgage payment is roughly around 35% of the total pretax income and the total debts including the mortgage payment don’t exceed 50%. But, these figures can vary depending on the loan type and the borrower’s overall credit profile. Some scenarios and loan programs will allow for the total debt to income ratio up to 55% if the overall credit profile is strong enough. One thing missing from this mortgage calculator is balancing the risks associated with financing a second home as collateral. These factors can influence the interest rates from lending institutions such as brokers or banks depending on the type of loan options available in your market.
Mortgage Calculator definitions
The amount of money needed to purchase the house.
The down payment is the amount of money the borrower wants to put down to purchase the home or the required amount by the lender. Normally, this can be inputted as a dollar amount or a percentage. The mortgage amount will cover the difference between the down payment and the home price.
The loan amount is the dollar figure that will be financed. So, the home or purchase price, minus the down payment equals the loan amount.
The interest rate on a mortgage is known as the mortgage rate. Mortgage rates are set by the lender and can be fixed or variable, with the latter adjusting once the fixed period ends. Mortgage rates fluctuate daily and are dependent on a borrower’s credit history, the loan scenario, and loan type.
The length of the mortgage is referred to as the loan term. For example, the most common loan terms are 10 year, 15 year, 20 year, and 30 year. Make sure you input the loan term properly. Some mortgage calculators will ask for the loan term in months and some in years. So, a 30 year loan term expressed in months would be 360.
Mortgage payment schedule
A mortgage payment schedule is a detailed table of periodic loan payments that shows the amount of principal and interest that each payment consists of until the loan is paid off at the end of the term. For each period, each periodic payment equals the same total amount.
However, on the mortgage payment schedule or Amortization Schedule, the majority of the payment in the beginning of the term is applied to interest. Later in the schedule, the percentage of the payment going to principal vs interest will change with the majority of the payment being applied to principal. However, all numbers on the mortgage payment schedule will change if extra mortgage payments are made.