What Does a Home Loan Calculator Do?
Welcome to our Lending Studios home loan calculator page. Our free home loan calculator can help you determine what your monthly mortgage payment will be. It rolls in your principal and interest, taxes, insurance, and private mortgage insurance (PMI). You can also use it to identify how your mortgage payment is affected by home price, down payment, interest rate, and loan term.
Part of making sure that you are being financially responsible when investing in a home is researching what you can really afford. The mortgage calculator gets you those figures so you can make sure the home of your dreams will keep you feeling dreamy after the purchase and for years to come.
Monthly Costs Included in Your Mortgage
Calculating your monthly mortgage costs can be tricky if you don’t plan for those other fees that get tacked on beyond just principal and interest payments. When it comes to making sure you have an accurate snapshot of your future monthly mortgage cost, our home loan calculator will factor in these five contributors:
- Principal: This amount is the sticker price of the home minus whatever you contribute at closing with a down payment.
- Interest: Depending on your credit score, and what type of lending package you receive, this is what your lender charges you for the loan.
- Property Taxes: Your home and property (land) is assessed an annual tax from the government.
- Private Mortgage Insurance: Buyers that don’t have at least 20 percent to put down on a home usually pay mortgage insurance fees. This is a safety net for the lender in case you default on your loan. The good news is, once you have paid down at least 20 percent of your principal, the mortgage insurance is no longer needed (unless you have an FHA loan).
- Homeowners Association Fee (HOA): This fee is only applicable if you live in an HOA-zoned community. HOA fees go towards neighborhood upkeep, improvements and neighborhood amenities.
Tips for Reducing Your Monthly Mortgage Payment
Home loan calculators are great tools for looking at ways that you can make your goals become a reality. Play around with the mortgage calculator using different factors to see how you could possibly lower your monthly payment.
The best ways to help reduce your monthly mortgage payment include one or more of the following strategies.
Lengthen the pay-off period of the loan. By doing this you will succeed in lowering your monthly payment. (Keep in mind that this will also mean that you will be paying more interest over the life of the loan.) To make sure this is a healthy financial goal, configure your amortization schedule.
Take out a smaller loan by buying less house. This may seem obvious, but it really is that simple. Buy what you need, and less of what you want.
Put down 20 percent and avoid paying private mortgage insurance. Where feasible, this is a great way to save on your monthly mortgage fees. Using our mortgage calculator, toggle what your payment would be with PMI and without it–it will surprise you. Remember, FHA loans require that borrowers have mortgage insurance for the length of the loan, so if you are in that category, this saving strategy won’t apply to you.
Shop around for the best rate you can find. Lending Studios is dedicated to connecting our borrowers to multiple lenders and loan packages so you can compare and shop around for stellar rates. At the minimum, we recommend that you shop at least three lenders so make sure you are getting a competitive rate for your financial situation.
What Can Cause a Monthly Mortgage to Change
Our Lending Studios home loan calculator offers borrowers an approximation of monthly mortgage costs, but depending on your particular loan package, your monthly mortgage amount could change. Factors that can affect your monthly mortgage amount include: 1) investing in an adjustable-rate mortgage (ARM) instead of a fixed rate; 2) an increase in property taxes or homeowners’ insurance; and 3) if you are late in payments and are assessed a late payment fee.
Don’t get caught off-guard with monthly mortgage changes. Discuss thoroughly with your lender what to expect over the life of your loan. Some loan packages will start at a fixed rate then change to an ARM after a period of years. Make sure you know what you are signing up for from the get-go.