If you're planning on pursuing a mortgage soon, one thing you may be wondering about is all of the options available to you. Mortgages come in all shapes and sizes, and it can be confusing when trying to find the best one for your future home. In order to get the best rate, it's crucial that you do as much research as you can, including using a mortgage calculator. Thankfully, we've made this process virtually painless with our free mortgage payment calculator tool. We want to assist you in making the best decision for your budget. Our free mortgage calculator can help you accurately estimate your mortgage expenses so that you can be in charge of your payments.
Buying a home is often life’s largest financial transaction, and how you finance it shouldn’t be a snap decision. Setting a budget upfront -- long before you look at homes -- can help you avoid falling in love with a home you can’t afford. That’s where a simple mortgage calculator can help. A mortgage payment includes four components called PITI: principal, interest, taxes and insurance. Many homebuyers know about these costs but what they’re not prepared for are the hidden costs of homeownership. These include homeowners association fees, private mortgage insurance, routine maintenance, larger utility bills and major repairs. Bankrate.com’s mortgage loan calculator can help you factor in PITI and HOA fees. You also can adjust your loan and down payment amounts, interest rate and loan term to see how much your payments might change. It’s important to know that your specific interest rate will depend on your overall credit profile and debt-to-income, or DTI, ratio (the sum of all of your debts and new mortgage payment divided by your gross monthly income). The riskier the borrower, the higher the interest rate in many cases.
The two most common types of mortgages are fixed-rate and adjustable-rate (also known as variable rate) mortgages. Fixed-Rate Mortgages: Fixed-rate mortgages provide borrowers with an established interest rate over a set term of typically 15, 20, or 30 years. With a fixed interest rate, the shorter the term over which the borrower pays, the higher the monthly payment. Conversely, the longer the borrower takes to pay, the smaller the monthly repayment amount. However, the longer it takes to repay the loan, the more the borrower ultimately pays in interest charges. Adjustable-Rate Mortgages: Adjustable-rate mortgages (ARMs) come with interest rates that can – and usually, do – change over the life of the loan. Increases in market rates and other factors cause interest rates to fluctuate, which changes the amount of interest the borrower must pay, and, therefore, changes the total monthly payment due. With adjustable rate mortgages, the interest rate is set to be reviewed and adjusted at specific times. For example, the rate may be adjusted once a year or once every six months.
We recommend putting at least 10% down on a home, but 20% is even better because you won’t have to pay private mortgage insurance (PMI). PMI is an extra cost added to your monthly payment that doesn’t go toward paying off your mortgage. Saving a big down payment takes hard work and patience, but it's worth it. Here's why: You’ll have built-in equity when you move into your home. You can finance less, which means you'll have a lower monthly payment.