Introduction
If you are in the market to buy a new home, you know that figures and numbers are absolutely necessary to give you a clear idea of your finances before applying for a mortgage with a bank or any financial institution. A home calculator is one of the useful tools that help you get information on an amount of loan that you are going to borrow determining monthly payments, interest rates, amortization schedules, and the life of the loan.
Step 1
Use the home calculator installed as a widget on websites. When you request for free quotes on the net, there is a home calculator on the site giving you the financial info you need to make a wise decision. This type of calculator is really easy to use provided you have the right info. It will ask for basic data such as the loan amount, interest rates, and life of mortgage. There will also be variable information required like changing interest rates and the amount of funds that you can put up as a down payment on the loan.
Step 2
Include closing costs when using a home calculator. Whether you are borrowing to buy a new home or refinance an existing mortgage, closing costs are sort of fixed costs that you apply on each mortgage. Use a home calculator to see when you can recuperate your closing costs or break even. Closing costs are recovered after a certain period lasting from 3 to 4 years. It really depends on how long you are staying in a refinanced or newly bought home and the amount of savings you generate when refinancing.
Step 3
Trace the history of a mortgage. A home calculator is also useful when you are trying to trace the history of your mortgage. When you include certain parameters such as monthly dues, interest rates, and the loan validity, it will yield figures that tell you how much you have been paying all along. You can also look at past, present, and future trends in mortgage history using the home calculator by inputting special values.
Step 4
Calculate the value of a house using a home calculator. The appraised value of a home will indicate how much your house is worth if you were to sell it at current market conditions. The figures in a home calculator will tell you whether you will have enough money to pay off the rest of the mortgage. It will also indicate whether you are going to lose lots of money on all payments you have done on the loan if you abandon the mortgage or refinance.
Step 5
Estimate in quantifiable terms what 'paying back faster' means. Using a home calculator to give a scenario when you are likely to pay off your entire debt is a great way of detailing your financial capability. Note that there are also special conditions when you pay the entire loan before it is due to expire. Factor in penalty costs if you are going to get rid of your debt faster than anticipated. Estimate with a home calculator what you can achieve in terms of decreasing loan costs through increasing monthly payments and how this would affect your weekly or monthly budgets.
Tips
You can also invest in a professional (financial) home calculator. It is not an expensive gadget, but will help you reach solid financial decisions using standard calculations such as amortization, depreciation, interest rates, and net future value (NFV).
Sources and Citations
CNN Money
Mortgage Calculator
