When it comes to the purchase of a new home, one of the most important pieces of information any buyer can have is to know exactly how much they can comfortably afford. There are only a few ways to figure out this information, but one of the easiest is by using a mortgage calculator. This type of tool can be found almost anywhere both online and at your local financial institution. The main purpose of a mortgage calculator is to give you an idea of how much your monthly loan payment would be depending on the purchase price of a home, the down payment, length of the loan and the interest rate attached to your mortgage.
There are many websites that offer a mortgage calculator free of charge and can be one of the best tools to determine exactly how much you can spend on the purchase of a new home. This will also give you a good idea about how much interest you will pay over the course of the entire loan. Each mortgage calculator will use the same formula to give you as accurate a calculation as possible, and will help in the planning phase of the home buying process. It is important to have some information available before you begin to use the mortgage calculator.
The results of a mortgage calculator is only as good as the information that is imputed, and the more accurate the information you have the better the results. The information you will need to know prior to using this type of calculator is: your monthly budget, your credit score, the size of your down payment, and how long you want to pay for the loan. All of this information will help you get the most accurate result possible from your mortgage calculator.
When it comes to your budget you will need to know exactly what type of payment you will comfortably be able to afford. The general rule of thumb is that your mortgage should be no more than 30 percent of your gross monthly income. This percentage maybe a little too high for some individuals, so another way to determine how much you can afford is to try to get a mortgage payment at or lower than the monthly rent that you are paying now. This way you will know you will be able to afford your mortgage.
Once you have played with your calculator to find the right payment to fit your individual financial situation, you will also know the purchase price of a home that you can afford. The next step is to take this information to your lending institution and then to your real estate agent. Once you have secured a loan for the amount that you want to spend on a home, the next step is to go shopping with your real estate agent. The key to a smooth purchase process is to know exactly what you can afford, and a mortgage calculator can help you determine this information very easily and quickly.