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Know Where You Stand with a Mortgage Affordability Calculator
For those who are looking to buy a new home in the near future, the first thing that you need to do is run a mortgage affordability calculator simulation. These new calculators are now available to you at most banking locations, and they will provide you with a series of key information points that you will need to know before making a purchase.
What These Calculators Do
Upon accessing one of these calculators, you will be asked to input a number of information points. These include:
- Monthly Household Income (Pre-Tax)
- Monthly Expenses
- The percent down-payment that you would like to make on a home (usually 20%)
- The best interest rate that you can get on a home loan
- The term of the loan
- What you expect the property taxes to cost you where you will be living
- The percent of homeowner’s insurance (relative to total value) that you will purchase
After you have input all of this information, the benefits to using a mortgage affordability calculator are produced. These softwares are able to (closely) estimate exactly how much:
- Home you can afford
- Your down payment should be
- What your monthly payment would be
The Best Mortgage Affordability Calculator
Personally, my favorite calculator on the market right now is one that is created by Chase Bank. Their products are superior in every way, and their calculators are simple to use, easy to navigate, and free to access.
If you change on of the seven input factors listed above on one of their mortgage affordability calculators, all of which can be easily found online, a different result will be churned out to you almost immediately.
There are great benefits to using a tool like this, because it helps you to know where you stand on purchasing a home without expending much effort.
The most difficult parts will be:
- Finding the best loan provider at the cheapest rate and
- Discovering the approximate property taxes of the area that you hope to move to
Once you have done these two things, you will have the two most important parts of the input equation at your disposal–>interest rate on the loan and property tax rate.
Discovering The Interest Rate
Your interest rate will depend a lot on what your credit score looks like and how much you are willing to make as a down payment. Assuming that you have a 20% down payment, which is the recommended amount, then your credit score becomes the single most important factor.
If you have a credit score greater than 740, which is considered “Very Good” by the Fair Isaac Corporation, then you are most likely to get the best interest rates.
We suggest shopping around online for interest rate offerings as well. Many online banks and peer-to-peer providers are now capable of offering cheaper, equally as safe loans when compared the the banks with physical locations.
They are often able to provide cheaper rates because they don’t have to pay the overhead for up-keeping physical branches, which translates to more money saved for you!
So, remember before you go to buy a home next time that the best thing you can do is use a mortgage affordability calculator to know what’s in your budget!