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Homebuyers, especially first time buyers, will eagerly jump into the mortgage process without completing what is arguably the most important step: Using a good online mortgage calculator in order to assess their financial situation. Most people make it very simple for the mortgage brokers to steer homebuyers into accepting deals that are more beneficial to the broker than YOU, the buyer – AND IT’S NO WONDER! Potential buyers lacking any grasp of how these loans are actually structured many times are easily confused and even overwhelmed with the process and terms. Points, principle, interest rates, interest only loans, ARM, FRM etc... can ALL be confusing. Why not be prepared by using a good online mortgage calculator before meeting with a broker or bank? Online mortgage calculators are standard on most bank or realestate type websites and most are very easy to use. By truly understanding your financial capabilities, and learning some basic mortgage calculations can level the playing field and very possibly save you lots of money. By learning how to use a basic mortgage calculator you can easily understand the basics of mortagage loans. Online Mortgage Calculator –The Basics Monthly Payment - the most basic job of a good online mortgage calculator is finding out your monthly payment. Here's what you need to input: - The amount you want to borrow - The interest rate of the loan - The length of the loan - usually in years or months You’ll simply enter these three numbers into the form and submit. The calculator will then process the three variables, principle, interest and length of loan and will return the amount you will pay monthly based on the criteria you entered. For example: The amount you need to borrow, or principle is, $200,000 at 6% interest rate to be paid over 30 years – your monthly payment will be: $1,199.00 per month. Analyze the Scenario A good online mortgage calculator will not stop there... It should return a few other critical numbers, such as: Total Amount the Borrower Will Pay In our case above the total amount paid – interest and principal - by the borrower at the end of 30 years will be $431,640. Total Amount of Interest The Borrower Will Pay In our case above the total amount of interest the borrower at the end of 30 years will be $231,640 about 53% of the total amount spent is on interest. Many are amazed how this seemingly slight numeric change in interest rate can have such a tremendous impact on the total amount paid over the life of the loan! As the interest rate increased to 7.5%, the total amount paid drastically increases – the total payment now is $503,280, with $303,280 going to interest only! The monthly payment would be around $1398. Online Mortgage Calculators – Summary This example clearly illustrates how a 1.5% jump in interest rate will cost you big money, over 70 thousand dollars over the life of the loan! Obviously you'll want the lowest rate when locking into a home loan. The online mortgage calculator arms you with critical knowledge prior to that initial meeting with loan officers or mortgage brokers.
Article Source: http://www.realestateinvestmentarticles.net
For 15 years Leslie Collins has been helping all types of borrowers get the loan information they need to make the best home buying decision . Please visit the easy to use mortgage calculator before you talk to banks or loan officers.
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