You Can Learn a Lot from a Mortgage Calculator

Thinking about buying a new home next year? It’s never too early to start planning. One of the smartest proactive steps you can take is to figure out how much home you can afford. That’s easier than you think, even if you’re severely math-challenged. Thanks to the ready availability of free online mortgage calculators, you can research, plan and secure a new home mortgage in minutes.

Do you have a price range in mind? Put it in the calculator, complete the form and find out what your monthly payment will be.

Are you operating on a strict budget? Just enter the amount of monthly payment you’re comfortable making along with the down payment you intend to put down and some other details. Hit “submit” and learn instantly how much mortgage you can qualify for.

Now that you have your base number, try adjusting the amount of the down payment up or down to see how that affects your monthly payments. Just a few thousand dollars more in a down payment could mean significantly lower monthly payments, especially if you don’t have to pay the private mortgage insurance fee typically required when you put less than 20% down.

You can also play with different interest rate terms. Compare a 30-year fixed conventional loan to an 30-year adjustable rate mortgage (ARM). An ARM can mean lower monthly payments in the short-term, but if interest rates go up, even a small increase could jeopardize your ability to meet your monthly obligation. If you’re risk-adverse, this exercise will confirm the wisdom of a fixed loan.

Are you a current mortgage holder? Use the calculator’s extra payments function to figure out how much you could save by paying off your loan early.

In just a few minutes and with very little effort, you’ll have a clearer picture of what your home-buying reality looks like. So instead of looking at homes you can’t afford, you can shop in your price range, which will save you a lot of time and spare you a lot of disappointment. It will also help the sales associate or REALTOR™ steer you in the right direction.

Here are three free online mortgage calculators for you to try:

MyFICO

FHA

Zillow

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