A mortgage calculator is an online tool that homebuyers often use before applying for a home loan program to know how much home they can afford. Knowing their home affordability helps them move forward wisely.
There are different types of home loan calculators and they can be used for various ways. Are you about to use a mortgage loan calculator Texas? Here are a few alternative uses to consider –
- Planning to pay off your mortgage early
If you are planning to pay off your mortgage early and want to know what the consequences will be, then using an online home loan calculator will be useful for you. By the time a 30-year fixed-rate home loan is paid off, you will have made total interest payments that will be significantly larger than the original principal on the loan. Check the “Extra payments” functionality of an online mortgage calculator to find out how you can shorten the term, as well as net big savings by paying extra money toward your loan’s principal every month or year, or even just one time. In order to know how much you can save, enter an imaginary amount into one of the payment categories, such as monthly, yearly, or one-time, and then follow the instructions to see how much interest you will end up paying along with your new pay off date.
- Decide about ARM
The lower interest rate of an adjustable-rate mortgage or ARM can be enticing. However, while an ARM may be appropriate for some borrowers, others may find that the lower interest rate will not cut their monthly payments as much as they think. In order to have an idea of how much you will really save primarily, enter the ARM interest rate into the mortgage calculator and leave the term as 30 years. After that, compare those payments to the payments you get when you enter the rate for a conventional 30-year fixed mortgage. Doing this may confirm your initial hopes about the benefits of an ARM or offer you a reality check about whether the potential plusses of an ARM outweigh the risks.
- Know when to get rid of a private mortgage insurance
You can use the mortgage calculator to determine when you will have 20% equity in your home. This percentage is a magical number for asking a lender to wave private mortgage insurance requirement. Enter your original mortgage amount and the date you closed, and then multiply the original home loan amount by 0.8 and match the result to the closest number to know when you will reach 20 percent equity.
These are some of the easy to use a home loan calculator except knowing your home affordability. So, you can check these things if needed when using a mortgage calculator.