Using a Mortgage Loan Calculator Texas: Avoid These 5 Traps

A mortgage calculator – an online tool, helps us to answer a number of vital questions. From how much house you can afford to save money on a refinance, a home loan calculator provides the data that we need to make a wise financial decision. This is why; it is vital for you to use this tool before applying for a home loan.

A mortgage loan calculator Texas can help you more than one way. But as it is an online tool, you need to be careful when using this and save yourself from these traps –

  1. Mortgage payment 

A mortgage payment often combines five different expenses. The primary ones are the principal and interest payments. Moreover, various mortgage servicing companies collect for insurance, private mortgage insurance, and real estate taxes. An online mortgage calculator should factor in all of these potential payments.

  1. HOA fees 

If you are a wise buyer, then you should avoid buying a rental property that comes with the Homeowner’s Association Fees. This is because it eats into the cash flow of the property, especially in the early years of leveraged property. But if you are a homeowner, some of the better communities come with HOA fees, like it or not. The key is to ensure you factor in these fees when making a purchasing decision. Most of the calculators don’t include these fees, but they should.

  1. Interest rates 

Before you use a mortgage calculator, it is vital for you to know the interest rate on the loan. In case you are just starting the search for a home, it is more likely that you don’t know the interest rate on your eventual mortgage. These rates are affected by a number of factors, including your FICO credit score, the down payment amount, home cost, location of the loan, your income, and debts, and types of mortgage. Getting the interest rare right is important with a mortgage calculator. Even a minute difference in the rate can have a big impact on both the monthly payment and the total amount of interest you will pay over the life of the loan.

  1. Taxes 

Mortgage interest on most owner-occupied homes is deductible for those who list their deductions. The deduction has the effect of lowering the effective interest rate on the mortgage. Real estate taxes are also deductible. Based on your marginal tax rates, tax savings can be crucial. Taxes are often ignored with many mortgage calculators.

  1. Closing costs 

Closing costs are also often left out of many mortgage calculators. But closing costs are important and they can vary based on the location of the home, down payment, purchase price, and many other factors. So, one should not underestimate the closing costs.

Using a mortgage calculator is an excellent way to start the home buying or refinancing process. However, you should keep this in mind that they provide you with results based on the kind of data that you provide. So, make sure to enter proper data to generate an accurate estimate.

Author Bio: Joan Gallardo, a Senior Loan Officer, with 20+ years of experience, here writes on 2 questions to ask the best mortgage lender in Houston when you are about to choose one of the first time home buyer programs in Houston.

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