Top Five Mortgage Calculators
Mortgage calculators come in all shapes and sizes. There are mortgage calculators that help plan your initial purchase all the way to ones that help you decide if you should pay discount points or by your mortgage on a bi-weekly basis.
Your garden variety home mortgage payment calculators represent only a single type of mortgage calculators available freely on the Internet. In fact, there are literally hundreds of free calculators designed to handle pretty much any real estate related calculation you might encounter.
Top Five Mortgage Calculators
The top five mortgage calculators available online today fall into the following categories:
- Fixed rate mortgage calculators
- Mortgage qualification calculators
- Discount points calculators
- Refinance mortgage calculators
- Loan costs calculators
Fixed Rate Mortgage Calculators
These are perhaps the most basic kinds of mortgage calculators, designed for people who know that they plan on buying a home with a mortgage and paying on it for say, 15 or 30 years via a fixed rate, non-adjusting mortgage. The key elements to have ready when you use one of these is to know the price of the home you want to buy, the interest rate you want to use, the length of your loan in months, the previous year’s property tax total, and the annual hazard insurance bill.
Mortgage Qualification Calculators
This type of calculator is much like the fixed rate mortgage calculator, except that it also asks you to put in information regarding your monthly debt payment total and your adjusted gross income. It will then provide you with information of your front and back end debt to income ratio, which is useful in knowing whether you’re likely to be qualified for a mortgage loan.
Discount Points Calculators
Sometimes it is advisable to pay a premium fee up front in order to lower the mortgage interest rate you pay over the life of the loan. This is especially true if you know that you will be living in the home for a long period of time – as it takes about 5 years to break even on the amount you paid up front to lower the mortgage rate.
Each point you pay in up front premium is equal to one percent of the mortgage amount you borrow. A single “point” reduces your mortgage rate by about a quarter of one percent. Again, paying discount points only makes sense if you know that you will be living in your new home for longer than it takes to break even on what you paid up front.
The value of a mortgage calculator that helps figure discount points is that it helps you make a smart decision in paying up front to lower your interest rate.
Refinance Mortgage Calculators
These calculators are useful in aiding you in the decision of whether it’s beneficial to refinance your home. Normally, you want to refinance your home if you’re able to achieve a 1.5% or greater reduction in the rate you’re paying now. This calculator will help you determine your new monthly payment, net interest savings, and – most importantly – it will also tell you how many months it will take to break even on the closing costs.
Loan Costs Calculators
Loan costs calculators help you estimate the amount of money you’ll pay for your loan in terms of fees and points. Basing its calculations on the concept that annual percentage rate or APR you will pay is determined via the out of pocket expenses associated with the loan, you’ll want to keep an eye on the relationship between the loan rate and th APR. In general, the closer the quoted interest rate is to the APR, the lower the fees.
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