How to Calculate Your Mortgage Payment Before You Apply

A home will probably be the biggest investment you will ever make. It’s for this reason that you should know as much as you can before going very far into the purchase process. After all, nobody likes surprises, and few things are more disappointing than having your heart set on a home, then finding out that you can’t afford something you like. Fortunately, the Internet is full of calculators that will make child’s play out of determining exactly what your mortgage payment will be before you set foot in a broker’s office. This article will give you what you need to know to make a mortgage payment calculator work to your advantage.

Mortgage Calculators

There are many mortgage calculators available on the Internet. Practically all of them operate much the same way. Choose one. Clydesdale Bank’s mortgage payment calculator is a fully featured example.

Whether you are looking to finance a new loan or refinance an existing loan, determine the amount you want to finance. There is normally a blank space where you will want to enter the amount to be financed. Put that number in the blank space.

Next, you will need to enter the amount of the mortgage term. This is the length of you want to pay off the loan. This figure is normally entered as years, and the calculator will automatically give you the number of months that this translates to.

The next step is to enter the interest rate of the loan you are looking for. This is normally the percentage rate for a single year of financing.

Next, you will enter the date on which the proposed mortgage will start. This usually consists of the month, day, and year the mortgage starts.

Finally, you push a button that says “Calculate” or similar word. This calculates all of the figures you have entered and gives you the final amount of your monthly payments based on the data you have supplied.

Anything Else?

Actually, yes. You should understand that the amount you determine with the mortgage calculator will determine only your payment amount. You will still need to add the amounts of your insurance, taxes and other fees included in the purchase of your home, which will be included in the monthly payment. Some mortgage calculators also have spaces where you can include additional fees and payments that you will be making, but whether they are on the calculator or not, you will need to add them before you finish.

Also remember that as a rule of thumb, your final housing payment should not exceed 31 percent of your total income otherwise your application may be declined.

How could it get any easier to be good to yourself?

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