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How To Quickly Determine Your Mortgage Borrowing Capacity

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If you are in the market for a new purchase mortgage or are refinancing your existing mortgage loan, a mortgage calculator is a useful tool for determining your borrowing ability. Using a mortgage calculator is not difficult and can quickly tell your monthly payment amount including taxes and insurance if applicable.

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mortgage calculator How To Quickly Determine Your Mortgage Borrowing CapacitySuppose for example that you are refinancing your existing loan and want to take cash back at closing. The mortgage calculator will determine your new payment amount taking into consideration different mortgage rates that you might qualify and show you the payment amount. The mortgage calculator can also display your amortization schedule and show you graphically how your loan is paid down over time.

Loan amortization describes the process of paying down your mortgage loan over time. Mortgage loans are front loaded with interest meaning that you pay the majority of your finance charges in the early years of the loan. This means that when you first take out a mortgage the majority of your payment amount is applied to interest and very little is applied to pay down the loan balance. This gradually reverses over time with more of your payment being applied to the balance and less to lender finance charges. The amortization schedule you receive and the associated graphs illustrate the process of loan amortization for your home mortgage.

Mortgage Rate Shopping With a Mortgage Calculator

Mortgage calculators can be a useful tool for comparing loan offers. Some mortgage calculators allow you to enter your current mortgage rate and term length into the calculator along with the rates and terms of prospective lenders. Remember that term length is the amount of time that you have to repay the loan; common term lengths include 15 and 30 year loan durations. The mortgage calculator will take this information and display a graph detailing the amount of interest you will pay to each potential lender.

Suppose for example that you were comparing your existing 30 year loan with a 7.0% mortgage to a 6.5% Adjustable Rate Mortgage for 15 years. The Adjustable Rate Mortgage has a fixed rate for the first five years before the lender resets the loan. The mortgage calculator will determine the fixed interest amount paid during the fixed period as well as your payment amount based on estimate interest rate changes after the lender begins adjusting your loan. A good mortgage calculator summarizes this information graphically and compares the potential savings from each lender you are considering.

You can learn more about helpful tools for refinancing your mortgage without paying too much by registering for a free mortgage refinancing tutorial. If you are need of a good online calculator for determining your payment and borrowing capacity try this mortgage calculator.

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