As you search for a new home, it is critical to not only find the perfect property to meet your needs, but also to be certain that you can afford it. Mortgage calculators are the best first stop for any home buyer. Usually found on broker or lender websites, these calculators take into account how long you’d like to pay for your new home, how much you can spend, and average interest rate at the time. It then produces an estimate of your monthly payments so that you have a general idea of what you can afford before you speak to a broker. This is invaluable in your home ownership experience because it gives you a reasonable idea of what you can afford.
Know What to Afford
The most important part about buying a home, other than it being safe and satisfying your needs, is whether or not you can afford it. In the past many home buyers have fallen victim to poor banking policies and entered a mortgage agreement without fully understanding or realizing the financial responsibility that home ownership actually is. While policies have changed in recent years, mortgage calculators are still an essential part of your home ownership planning.
Before browsing real estate offices, magazines or the internet for the perfect home, you need to know what you can afford. A mortgage calculator has various fields that allow prospective home buyers to plug in estimates on things like the interest rate and down payment. By having this information on hand, this gives you an idea of what you should be looking for. Some mortgage calculators have the added benefit of additional fields. These optional fields calculate how much of a benefit you’ll see in the life of your mortgage if you can make additional bi-annual payments, extra payments throughout the year, or one large additional payment once a year. With extra payments, you can lower the principle on your loan, which in turn means that you incur less interest and can potentially pay it off quicker.
While current mortgage holders may not consider this, mortgage calculators are very useful for refinancing as well. Some mortgage calculators provide fields for home owners to fill in current mortgage information. By providing your current interest rate, the amount of time left on your mortgage, amount owed and your monthly payments, you can use mortgage rates being offered right now to see what you can expect if you refinance. Given how important it is to your financial health to consider refinancing, it’s a good idea to utilize a mortgage calculator with refinance options every time there are significant changes in mortgage rates and policies. You may be able to get a better deal by refinancing.
Also, for some prospective home buyers, a mortgage calculator can help establish if buying a home is really the best option at the time. There are a lot of expenses that go with home ownership that do not include monthly mortgage payments, such as home repair and utility bills. Using a mortgage calculator will allow you to see if you can afford to buy a new home or if for the time being, renting is more beneficial. In addition to establishing if you can afford a mortgage, mortgage calculators are good for helping potential buyers realize what other programs or services might be available to them. Mortgage calculators are especially useful for young couples who might be interested in starting their lives together. One of the biggest challenges that a young person or couple may face is money. Concerns about if they can afford a new home and all of the expenses that come with home ownership are often times a priority. Fortunately, mortgage calculators can help put this into perspective.