With our free mortgage calculator, you can simply input information to see your anticipated or potential monthly payments and what you’ll pay out in interest throughout a loan. We can equip you in your search for a mortgage, help you answer whether you can afford that house and guide your budget and financial planning. Also, you’ll see the financial implications, not just in the short-term, but many years down the road from the type of mortgage you choose. Check out the Wirefly Mortgage Center to compare mortgage rates in your city.
You will likely find very few, if any, financial commitments more significant than a mortgage.
When you borrow to become a homeowner, you’re obligating yourself to years of repayments with interest. Missing monthly or other required mortgage payments could place you in foreclosure, subject you to legal proceedings, damage your credit and make it difficult to borrow in the future.
Before you leap into any mortgage, you need to determine whether you can afford the payments. In your decision, consider first that the total of all your monthly debt payments (that includes credit card payments, car loans, student loans and the mortgage) should not exceed 43 percent of your monthly gross income. Lenders generally cap the acceptable ratio of the mortgage payment (by itself) to your monthly income at 28 percent.
The amount, length, interest rate and whether it’s variable or fixed constitute major factors in the calculation of your monthly mortgage payment. Your decisions on especially the rate and type of interest will shape your ability to handle home buying. In addition to the monthly affordability, you might wonder the overall cost of a loan, i.e., the amount of interest over the life of a loan.
The Inputs and What They Mean to You
Our free mortgage calculator generates useful data, namely your payment and how your loan balance will ultimately reach zero if you stay in the loan. We’ll total your mortgage payments and the amount that goes to interest throughout a loan’s lifespan.
You simply enter the information asked for in each of the blanks. The numbers you plug into our calculator can come from your bank, realtor, home buying guides and other places.
To better harness the benefits of our mortgage calculator, you should understand the basics of the inputs we use for our calculator. Below is a description of what each means and what you should enter:
Enter the amount of your existing, new or potential mortgage. The lender may have prequalified you for an amount or you may already have a contract to buy your home.
If you’re considering a mortgage, take note of the down payment required by the bank or loan program. For conventional mortgages, figure on a down payment of 20 percent. In such a loan, your mortgage amount is 80 percent of the price.
Lenders may offer mortgages that require less than a 20 percent down payment. You can still enter the loan amount by multiplying the price by the difference between 100 percent and the down payment. For example, if your lender allows a ten percent down payment, use 90 percent of the price for the mortgage amount.
Our calculator will calculate your monthly payment and the schedule of principal reduction and interest payments throughout the loan’s life. However, the monthly payment won’t reflect the monthly cost of private mortgage insurance (PMI). When you borrow more than 80 percent of the price, lenders will require PMI so that they will have coverage of losses should you default on the loan.
Your monthly mortgage payments include principal and interest. Amortization means the period during which you pay down the principal until it reaches zero.
You can enter the amortization period in years. Typical loans and, thus, amortization periods span 15 years or 30 years. Keeping all other things equal, you’ll see from the mortgage calculator that a 30-year period carries a lower monthly payment, but you’ll pay more in interest than in a 15-year period.
For the interest term, you enter the amount of time your loan is in effect. The interest term typically lasts shorter than the amortization period. For example, you may have a loan with an interest term of ten years and an amortization period of 30 years. This means that your payments are based on a period of the principal declining over thirty years. However, your monthly payment is good for ten (10) years. At the end, you negotiate new terms and may have a shorter amortization period.
Here, choose either fixed or variable, depending on what you’re consideration or what your lender has offered.
Our mortgage calculator comes in handy when you’re thinking about the consequential decision of going with a fixed or variable interest rate. As its name suggests, a fixed-rate mortgage has one rate throughout the life of the loan. If you opt for a fixed interest rate, you get at least close to certainty in your monthly payments and budgeting for household and living expenses.
However, you don’t get the advantage of lower interest rates in a fixed rate loan unless you refinance. The prospect of lowering monthly payments when rates decline may attract you to a variable interest rate loan. In such a loan, rates change at specific intervals based upon movements of a rate index. When that index rates falls, so does your interest rate. Index increases mean a higher mortgage rate and larger mortgage payment for you.
As a general rule, mortgage rates run between one percent and seven percent. Your lender or prospective lender can furnish you the rates to insert in our mortgage calculator.
Whether you choose fixed or interest, you can help keep your interest rates and payments from ballooning. Lenders set interest rates based upon your credit history. Your FICO (Fair Isaac Corporation) score serves as a primary barometer of how you handle credit. Late payments or credit cards approaching their limits lower credit scores and cause lenders to regard you as a high default risk.
Make sure you periodically check your credit history for potential errors that may skew your credit score. Go to AnnualCreditReport.com to get a free report from each of the three major credit reporting agencies – Experian, Equifax and TransUnion. Your interest rate can also turn on your income and your debt-to-income ratio. The further you keep it below the 43 percent threshold, the better you’ll likely find your interest rates.
Your lender may have prequalified you for a particular rate. If so, use it. With our mortgage calculator, you can also compare the monthly payments and total interest from a set of advertised rates.
On our mortgage calculator, you can choose from “Monthly,” “Semi-Monthly,” “Bi-Weekly,” “Weekly” and “Acc-Weekly” (“Accelerated Weekly”) When you press “Calculate Now,” you’ll see a display of the payments for each of these payment periods.
The traditional mortgage product calls for you to pay monthly. However, lenders offer other payment options where you pay more than once each month. By increasing the frequency, you might shave the repayment time. Take note in particular of our “Accelerated Weekly” option. When you pay this way, as our calculator demonstrates, your amortization period can decrease by a few years. You’ll also see that you can save significantly in interest cost based on amortization.
Our mortgage calculator runs numbers based on a wide array of loan scenarios and combinations. With payments and interest totals in tow, you can decide whether now is the time for you to get a mortgage. If you say yes, then the figures from our calculator can assist you in settling on the best available fit for you and your budget.
When you apply for your mortgage, you’ll have a good idea about your monthly principal and interest payments. Mortgages come with other items that may figure into your monthly payment. Your bank may include property taxes and homeowner’s insurance in the payment through escrow. Keep in mind the cost of private mortgage insurance if you don’t have a down payment of at least 20 percent of the home price. Your lender or closing agent should explain these parts of the payment to you.
While our mortgage calculator won’t capture all of these extras, you will get a good barometer of your mortgage payments and your overall mortgage obligations.
Wirefly Is America's Most Trusted Source For All Cell Phones, Plans, TV, and Internet Deals
Wirefly offers great deals on a large selection of smartphones, cell phones, tablets, mobile hotspots, and other wireless devices for the nation's most popular carriers. Use Wirefly’s innovative cell phone and plan comparison tools to ensure you are getting the best deal on the market. Shop with confidence knowing that Wirefly wants to help you find the best prices on cell phones, cell phone plans, TV, and Internet service.