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How to Use a Mortgage Calculator

calculator1Purchasing a new home is a major financial investment and most likely you will be using a mortgage to acquire your new property. Determining what your monthly payments and interest charges can require some pretty complex math for you to fully understand. In the rest of the blog we’ll discuss how to use a mortgage calculator and how it can help determine your monthly mortgage rate payments, interest charges, amortization periods, and few other functions.

Determining Down Payment Amount

To start with your mortgage calculator you’ll need to know the purchase price of the home and the down payment amount you intend to use to purchase the home. You need to put a down payment of at least 20 percent to avoid having to pay private mortgage insurance (PMI) and possibly a better interest rate.

Interest Rate and Amortization Period

Once you have an idea of the amount of mortgage financing needed, your next step is to choose your interest rate and amortization period. Different lenders offer different interest rates for their mortgage products, so you will want to play calculator2around with the numbers. Run calculations to determine which combination of mortgage financing, interest rate, and amortization period that will give you a monthly payment to fit your budget.

Refinancing Calculations

You can use your mortgage calculator if you are thinking about refinancing your current home mortgage. You take your outstanding balance as the principal amount and then choose an amortization schedule that fits your financial goal. Make sure to watch your interest payments, by refinancing to a longer amortization period your monthly payment may go down but your total interest paid is much higher.

Closing Cost

Last don’t forget the numerous closing cost that there will be. Fees, taxes, and more which will need to be figured into the overall calculation. Closing cost include everything from property taxes, appraisal fees, to government filing fees. Depending on the home and the city, or community you’re buying in these fees will vary.

Online calculators can handle the tricky math to determine to determine your monthly payments and interest cost. You still may find that you have question about your mortgage and the mortgage process. You can contact a mortgage professional to answer your questions and concerns.

moo thorpe headshotWhether you are selling your home, or buying a home, I can help you with your endeavor. Please contact me at 505.780.0310, or email me at moo@moothorpe.com and I will be happy to assist you.

 

 

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