There are a variety of free mortgage calculators available on the Internet. These can be useful for determining how much home you can afford, whether to buy a home or continue renting, and what your monthly payment will be. Here are descriptions of a few different calculators.
What Can You Afford
It's a smart idea before you go house searching to know roughly how large a mortgage you can afford. An affordability calculator will take into account all your debts (auto loans, credit card debt, etc), insurance and taxes for the new home, your income, and information about the loan itself to calculate the highest loan amount you a lender is likely to give you.
Monthly Payment
When determining whether or not you can afford a loan you should look at both the total amount you'll pay over the life of a loan AND what you'll pay each month. This monthly payment includes not only principal and interest but also taxes and insurance. A payment calculator takes all four factors into account to give you a true monthly payment.
Rent or Buy?
Another great tool allows you to see how much money you'll lose or save by renting, and how large a benefit buying a home might be. You'll be able to change the number of years used in the calculation. So for example, if you were planning to buy a home and then sell it in five years, and you wanted to know if that was better than renting for the next five years, you'd put a "5" into the appropriate field in the form. In this case you might see that you'd save $80,000 in monthly payments if you rent, but that you'd make that up and earn an additional $5,000 when you sold your house. So if you were able to pay the larger mortgage payments now, you'd end up better off after your house sold.
Refinancing
If you currently own your own home, you may wonder whether or not it would be beneficial to refinance. There is a calculator for this too. One of the factors to include when considering whether to refinance or buy is how soon you'll sell your home. For example, if you plan to sell your home in five years, you might end up saving $1,500. However, if you were to sell it in ten years, your savings could be $4,000, while if it sold in 25 years, you would lose $7,500.
Loan Comparison
There are a variety of loan products available out there. In order to know which is best, you need a loan comparison calculator that considers interest rates, points, and closing costs. You can then compare the loans based on important factors such as the monthly payment and the total cost over the life of the loan. Some loans also have mortgage insurance associated with them, but many calculators might not take this into account, so be careful.
Bi-Weekly Payments
Want to know if paying off your mortgage every two weeks will actually help you save money over paying once a month? There's a calculator for this too. It can show you how much quicker you'll pay off the loan and how much you'll save in interest. Because you won't pay as much in interest by paying every two weeks, you could lose out on some tax benefits. A good calculator will take this into account and show you a "net savings" by taking into account the loss in tax savings.
Using some or all of these mortgage calculators can help you make a better decision regarding buying or refinancing a home.
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