A mortgage calculator processes your mortgage amount, interest rate, and repayment term in order to give you an estimate of your monthly payment. Many calculators will also give you the amount of interest you will pay over the life of the loan, and some will even break that amount down month by month. Changing terms and playing with figures will allow you to discover which terms will suit you the best.
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Mortgage calculation generally works in this way: A mortgage amount of $150,000 with an interest rate of 7% and a term of 30 years will have a monthly payment of $997. The total interest paid on this loan will be $209,263 and the monthly average of interest will be $581. If the interest on this loan seems to high but you do not qualify for another rate, shortening your term to 15 years can save you money on interest. If you change the term entered into the calculator to 15 years, keeping all of the other information the same, the total interest paid is reduced to 92,683, a difference of over $100,000.
Mortgage calculation can make it easier to decide the following information:
- the optimal term length
- the minimum down payment you will need to give
- the highest interest rate you are willing to accept
- whether an extra yearly payment is worthwhile
Buying a new home usually means taking on a new mortgage, both of which you will have to live with for the next five to thirty years. Making sure that the mortgage suits you just as well as your new home will help make those years more enjoyable. Looking into the possible terms of your new mortgage can only help. A good way to go about researching mortgage terms is to use a mortgage calculator. Mortgage calculation will help you choose the loan you want and ensure that you do not take on loan that you can not afford. Enter your information into our mortgage calculator to get an estimate on your monthly payments and fill out our free short form to contact up to four lenders about your new mortgage.