How to Compare Mortgage Rate Calculators
Mortgage rate calculators allow the user to compare payments between different mortgage products. This gives the potential buyer an idea of what they will pay for the home on a monthly basis. However, all mortgage rate calculators are not created equally. Look out for these sections to ensure you get an accurate description of potential payments.
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Fixed vs ARM
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A fixed rate mortgage means that the interest rate the borrower is paying is set for the life of the loan. It will not change up or down. An ARM, or Adjustable Rate Mortgage, will have a set interest rate for a certain period of time, which will then change after the initial fixed period is over. When comparing mortgage calculators, you must use the calculator that matches the loan you are trying to calculate. Use a "fixed" calculator for fixed rate loans, and an ARM calculator for adjustable rate loans.
Refinance Calculator
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A refinance calculator varies slightly from a standard mortgage calculator because the user has already purchased the home. Therefore some of the terms used will be different. For instance, instead of "purchase price" words such as "home value" will be used. Other terms such as length of the loan and interest rate will remain the same.
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Additional Considerations
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When comparing mortgage rate calculators, make sure that the calculator you are using offers the most accurate picture of what the monthly payment might be. Therefore, additional considerations such as property taxes, property insurance and PMI (Private Mortgage Insurance) should be factored in. Also, if purchasing a condo or property with an association fee, those monies should be added into the total as well.
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