Although web-based interest calculators can’t tell you what size mortgage you can afford, they will help you determine how much your monthly payments will be after you’ve closed on a new home.
The first step is to determine the principal amount of the loan. This is the amount you will have borrowed from the bank and does not include your down payment, and the amount you will be paying interest on for the life of the loan. Enter your principal amount into the online calculator’s “Principal” or “Mortgage” box.
Next, select the number of years your loan is to be amortized over. A typical mortgage is amortized, or paid off in installments, over a 30 year period but your time frame may be different depending on the terms of your loan agreement. If you aren’t sure, enter 30 years into the calculator to be on the safe side.
The calculator will ask for your interest rate. You can call your bank, your buyer’s agent or search online for the day’s average interest rates. Press “Calculate” or “Submit”, and the calculator will take the information you provided and give you an estimate of your future monthly payments.
While online mortgage interest calculators are wonderful tools for helping you design and stick to a homeowner budget, it’s important to remember that they do not include compulsory fees such as property taxes, utilities, homeowner’s insurance, or incidental expenses like appliance replacements, landscaping and structural repairs.
For more information on Home Loans, visit JMA Properties Home Loan FAQ.