The Importance Of Using A Mortgage Calculator

The Importance Of Using a​ Mortgage Calculator
Before stepping outside to​ go house hunting,​ you​ should find out how much you​ can afford .​
If you​ don’t know what you​ can afford then it​ is​ a​ waste of​ your time,​ as​ well as​ a​ realtor’s time,​ to​ even go looking at​ houses .​
Knowing how much you​ can afford will enable you​ to​ spend your time looking at​ only those houses in​ your price range.
If you’re not ready for the​ stress and overwhelming amount of​ information that comes from dealing with a​ lender,​ then using a​ mortgage calculator to​ provide you​ with a​ rough idea of​ how large a​ monthly payment you​ can afford is​ a​ great option.
Using a​ mortgage calculator is​ simple .​
Before you​ start,​ make sure you​ have the​ following information handy: your total income,​ savings,​ and monthly debts .​
If your spouse or​ another co-borrower will be on​ the​ loan,​ then you​ also need to​ compile this information for them as​ well .​
Once you’ve gathered this information,​ you​ are ready to​ start.
The first thing you​ need to​ do is​ fill in​ your income,​ which is​ your gross income and not your actual take-home pay,​ then your savings,​ and then your total monthly debt .​
Remember not to​ type in​ the​ commas .​
Most online mortgage calculators will add these for you.
The next thing you​ need to​ do is​ select an​ income period .​
If you​ typed in​ what you​ make annually,​ then select annual .​
If you​ typed in​ what you​ make monthly,​ then select monthly .​
And so on,​ and so forth.
What you​ input in​ as​ savings in​ a​ mortgage calculator should include all of​ the​ money that you​ will have to​ cover closing costs and also make your down payment .​
This can also include any gifts that you​ may receive from relatives.
The monthly amount of​ debt that you​ input should include such payments as​ student loans,​ car loans,​ mandatory child support,​ and/or credit card payments .​
However,​ be aware that you​ should not count credit card payments if​ you​ pay off your balance each month without ever owing interest .​
Debts such as​ your current housing expenses,​ such as​ your rent or​ mortgage,​ should not be included the​ mortgage calculator.
When you​ come to​ the​ option for the​ interest rate,​ you​ can either choose the​ default value or​ input your own .​
Be aware that a​ mortgage calculator won’t produce accurate results if​ you​ use a​ rate on​ a​ 15-year loan or​ on​ a​ one-year ARM .​
The default value given is​ based on​ the​ current 30-year fixed rate with only one point.
Lastly,​ when you​ arrive at​ the​ results screen,​ there will be options that allow you​ to​ override some of​ the​ parameters you​ gave in​ order to​ recalculate .​
Included are the​ minimum required down payment percentage and also other parameters that are not user-specific on​ the​ initial screen .​
The former is​ beneficial because many people today are purchasing houses with no money down.
The results you​ get from using an​ online mortgage calculator will most likely not be accurate; however,​ they can provide you​ with a​ firm base from where to​ begin shopping from .​
Though it​ can be a​ hassle,​ as​ well as​ a​ bit time consuming,​ it​ is​ always best to​ consult a​ lender and get pre-approved for an​ amount you​ can afford .​
In the​ end,​ you​ will have to​ take this step anyway,​ but in​ the​ beginning a​ mortgage calculator can be a​ great tool that helps you​ begin the​ long process of​ owning a​ home.

You Might Also Like:

Powered by Blogger.