A mortgage is a written pledge of property used as security for the repayment of a loan. The property you purchase is the collateral for the mortgage. If you fail to make payments on the loan, the lender can repossess your home. As a result, the lender has some legal rights on your property as you pay off your mortgage. Unlike a standard loan, the mortgage is used to enforce the lenders rights to the property if the borrower does not repay the home loan. A Mortgage calculatoris used to help a current or potential real estate owner determine how much they can afford to borrow on a piece of real estate. It can also be used to compare the costs, interest rates, payment schedules, or help determine the change in the length of the mortgage loan by making added principal payments. It is an automated tool that enables the user to quickly determine the financial implications of changes in one or more variables in amortgagefinancing arrangement. The major variables include loan principal balance, periodic interest rate,compound interest, number of payments per year, total number of payments and the regular payment amount. When purchasing a new home most buyers choose to finance a portion of the purchase price via the use of mortgage. Prior to the wide availability of such a tool, those wishing to understand the financial implications of changes to the five main variables in a mortgage transaction were forced to usecompound interestrate tables. These tables generally required a working understanding of compound interest mathematics for proper use. In contrast, these calculators make answers to questions regarding the impact of changes in mortgage variables available to everyone. A Mortgage calculator can be used to answer such questions as: If I borrow $250,000 at a 7% annual interest rate and pay the loan back over thirty years, with $3,000 annual property tax payment, $1,500 annual property insurance cost and 5% annual private mortgage insurance payment, what will my monthly payment be? The answer is $2,142.42. You can use an online calculator to see how much property you can afford. A lender will compare your total monthly income and your total monthly debt load. A calculator can help you add up all your income sources and compare this to all your monthly debt payments. It can also factor in a potentialmortgagepayment and other associated housing costs (property taxes, homeownership dues, etc.). You can test different loan sizes and interest rates. Most people use amortgage calculatortoestimate the payment on a new mortgage, but it can be used for other purposes, too. Here are some alternative uses: 1. Planning to pay off your mortgage early. By the time a 30-year fixed-rate mortgage is paid off, the typicalmortgage holderwill have made total interest payments significantly larger than the original principal on the loan. The calculator can be used to find out how you can shorten your term and net big savings by paying extra money toward your loan's principal each month, every year or even just one time. 2. Decide if an ARM is worth the risk. The lower initial interest rate of an adjustable-rate mortgage, or ARM, can be tempting. But while an ARM may be appropriate for some borrowers, others may find that the lower initial interest rate won't cut their monthly payments as much as they think. To get an idea of how much you'll really save initially, the calculator can be used. It will give you a reality check about whether the potential plusses of an ARM really outweigh the risks. 3. Find out when to get rid of private mortgage insurance. You can use it to determine when you'll have 20 percent equity in your home. This percentage is the magic number for requesting that a lender waive private mortgage insurance requirement. With today's real estate market, it's important to find a mortgage loan that's ideal for you, your finances, and your future home. The worst things you can do is to avoid research and compare home loan options.
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