The Advantages of Using a Mortgage Calculator

Standing toe-to-toe with a mortgage broker can be intensely frightening. Brokers not only spend most of their time scowling and arching their brows, but they seem-for my tastes-a bit too deft with a fountain pen (imagine not only being denied the loan but also exiting quite unceremoniously with ink scribbles tattooed across your shirt). My point is this: Why not, when meeting with a potential lender, be equally armed?

Online mortgage calculators are a sort of homeowner simulation program, where different variables can be electronically inputted and accurate results instantaneously displayed. A quick navigation through one of the thousands of mortgage calculator websites currently available (www.erate.com is one such site) will yield near-perfect statistics for any mortgage situation. And, by comparing and contrasting different variables, a prospective homeowner can decided whether to rent or to buy, whether to apply for a 15-year fixed interest loan or a 5-year hybrid adjusted interest mortgage or whether to refinance at any given time.

Loan Amount

An essential factor in accurately calculating mortgages is the desired loan amount (also referred to as principal). Prospective homeowners willing and able to provide a substantial down payment, ordinarily receive better loan terms (i.e. lower interest rates through lower lender fees and points). In addition, a lesser amount of principal usually implicates a shorter loan term-shaving off months of unneeded interest payments. A mortgage calculator allows potential borrowers to alter the loan amount variable to discover a comfortable and affordable solution-remember: if a borrower sinks all their savings into a down payment and consequently cannot meet monthly payments, they default on the loan. In this respect, mortgage calculator websites grant new-fangled flexibility in ascertaining a perfect balance between down payment and principal.

Loan Term

The chief determinant of the amount of interest paid over the life of a loan is the length of loan. Interest, in most loans, accrues annually at a specific rate. By trimming down the length of the loan, borrowers subsequently slice off vast portions of interest payments (for instance, a 15-year fixed interest rate mortgage at 6% will save, depending on the loan amount, a homeowner thousands of dollars in interest portions versus a 30-year fixed loan). Mortgage calculator websites allow consumers to determine whether a 15-year loan (which, obviously incorporate higher monthly payments than longer loans) is an affordable and viable option, given their current economic position.

Credit History

A prospective borrower's credit history is extremely influential in determining interest rates, not to mention whether a loan gets approved. Lenders consider consumers with poor credit ratings "high risk" customers, and subsequently use this position to increase interest rates and closing costs. Knowing your credit record inside and out, as well as the ability to explain any discrepancies helps immeasurably when facing off with a broker. Answering this call, mortgage calculator sites allow potential borrowers with a checkered credit history to distinguish the average mark-ups with respect to home mortgages. If a lender attempts to gouge, retort with the calculated data you've accrued.

Through the use of mortgage calculator websites, dozens of other factors (adjusted interest rates vs. fixed interest rates, whether to refinance or not) can be closely examined and analyzed in order to determine when, where, and with whom a prospective homeowner should accept a home mortgage loan. Dealing with brokers becomes infinitely easier when hopeful homeowners show up educated and ready to barter. And this way, when the broker whips out his or her fountain pen, you know it's just to sign the papers.