What Is a Simple Formula for Mortgages?
There are many variables that go into a mortgage: the amount financed; length of the mortgage; and interest rates. It is simple to compare options you are considering by using a mortgage calculator. With a few simple steps you can determine your payment options and obtain an amortization schedule.
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Considerations
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Determine your mortgage needs. Figure out how much you would like to borrow and how long you'd like to take to pay it back.
Rates
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Compare rates by calling mortgage lenders and visiting online mortgage companies. Bankrate.com updates average mortgage rates daily on its home page to give you an idea of the rates available.
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Calculations
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Once you've determined the available rates, access one of the many mortgage calculators available online. Plug in the interest rate for the mortgage, the length of the loan and the amount you'd like to borrow. Consider the monthly payment along with the amortization schedule which will allow you to break down your principal and interest payments.
Options
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Mortgage calculators allow you to change the length of the mortgage, so that you can see the payment and amortization differences.
Costs
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Add in other factors like closing costs, insurance and property taxes. Many homeowners ask the mortgage company to add these amounts into the monthly payment.
Compare
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If you're considering refinancing, use the refinance calculator. Enter your current terms along with those you're considering for a new mortgage. You'll be able to consider your options side by side to see if refinancing makes financial sense.
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References
- Photo Credit calculator image by gajatz from Fotolia.com
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Comments
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How to calculate mortage amount based on annual salary.
