Check your mortgage rates: a handy calculator

By | February 16, 2009

Needing a little help calculating your mortgage payments? Try this calculator. It may not be 100% accurate because of all the possible variations, charges, etc.., but with declining mortgage rates over the past few months, it will help you to do back-of-the-napkin type calculations to check your mortgage isn’t being grossly overcharged.

I noticed in my own bank statements how quickly the local bank was to raise rates in the past two years, but I am still waiting for a commensurate fall in the rates. I could very well be using this when I go to the bank to update the passbook.

Calculator is provided by Mortgage Calculator.

This article is guest written by Adam Hefner, and examines the different kinds of mortgage rates you may end up paying. I hope you find this useful.

How to calculate a mortgage payment is one of your most important decisions when purchasing a home. Rather than be a mathematician, you will just need to learn a little bit about the process and what it is all about. You will have many choices when it comes to figuring out what your payment will be. Key to the process is what your credit is and what you will want to borrow.

What kind of mortgage do you want? Whether you choose an adjusted rate mortgage (ARM), a fixed, or a balloon type payment will depend mainly on how much money you make and what your credit score is. These variations will cost you dearly if you are not well informed about their differences!

If you get a balloon mortgage you will have to pay it off or refinance it every 5 or 7 years generally. Interest rates can change daily and so will your ARM. Your rates could start as low as 5% and go up passed 8% in a short period. The rates don’t stop there either; they could go very high, with no cap. Don’t make the mistake of comparing a low ARM rate to a higher fixed rate, the fixed rate won’t change but the ARM will. With a fixed rate of 7% what you start with is what you will end your mortgage rate with.

Do you have a large or small income? When a loan agent reviews your loan they will look at you using between one fourth and less than one half of what you make monthly or yearly. The best bet is not to spend more than a third of the money you make each month on your house payment. Basically you can look at it like this, if you are bringing home $1200.00, you will want your house payment around $400.

Are you aware of your credit score? The four basic categories for credit scoring are poor, fair, good and excellent. If you have good or excellent credit, the interest rate that you are offered is usually going to be lower. If your credit is in the low ranges, you can expect to see higher interest rates. Most mortgage loans are based on simple interest.

One type of simple interest loan, the amount of interest is added each day. If your payment on the first day is $360, the next day would be $370 and so on. Each day your interest is added until you pay for that month. When you have made your payment, your principle will go down (the base loan amount), and interest will be added to that smaller amount. So you will be saving money each time you do this by paying less interest.

Mainstream mortgages are usually calculated as monthly simple interest. Regardless of what day you pay your mortgage it will not change what you owe because the interest is charged monthly, as long as you pay on time. When using a mortgage calculator it is important to know which type of interest you are going to go with, daily or monthly.

When you decide on how to calculate a mortgage payment, make sure you are familiar with all of the terms associated with your loan. You will have a choice of simple or advanced models. You will get a bigger financial picture when you use the more advanced mortgage calculators.

Save time and learn the best way to calculate a mortgage payment from your own home. For more, visit http://www.MortgageLoans-101.com where you’ll find this and plenty more on your mortgage loan needs.

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