How a Mortgage Calculator May Help To Keep You Under the Budget?

 

If you’re planning to buy a home, make sure you know how you will finance it as even a small decision can make or break the deal. Because it’s one of the largest investments anyone could make, it should be done with utmost patience.

But before you run into home searching, you need to set up a budget upfront. This would help you prevent breaking your bank and you may end up choosing the home that suits your needs and budget. 

And when it comes to setting up the right budget, nothing could beat the importance of a mortgage calculator!!

For those who don’t know, a mortgage payment includes four important components, namely Principal, Interest, Taxes, and Insurance (PITI). It’s often observed that many homebuyers are well aware of these costs but they tend to overlook the hidden cost of ownership. From private mortgage insurance and the fees of a homeowners association (HOA) to larger utility bills, major repairs, and consistent maintenance, there could be multiple hidden costs. 

Importance of a Mortgage Payment Calculator

When you efficiently utilize the home loan calculator, you can effortlessly adjust your loan and the amount of down payment, loan term, and the rate of interest to experience the change in your payments.

You must know that your particular rate of interest entirely depends on your DTI ratio (Debt-to-Income) and overall credit profile. Always remember that “The higher the risk, the higher the interest rate would be”.

How to Calculate Your Monthly Mortgage Payment?

 

If you want to get a fair idea of a monthly mortgage payment, you need to put in the actual price of the home and the down payment you’re required to pay.

If you, however, want a precise amount, then don’t forget to add in property taxes and home insurance.

It’s often observed that most buyers usually have no idea about how much of their income should go toward housing. If you’re one of them, you can follow the tried-and-tested 28/36 percent rule.

As per many financial advisors and professionals, “People should spend in under a certain limit; they shouldn’t go beyond 28 percent of their total income”. In addition to the statement, “People should spend no more than 36 percent of their total income on miscellaneous things like credit cards, medical bills, mortgage payments, to name a few.

Let’s take an instance to understand;

Mark makes $60,000 a year. If we calculate using the mortgage calculator, then the gross monthly income would be $5,000 a month.

So, now the total monthly income would be $5,000 x 0.28 = $1,400.

It could easily be said that Mark’s total monthly mortgage payment shouldn’t go beyond $1,400 per month. And these payments may include your Principal, Interest, Taxes, and Insurance.

So, now the maximum loan amount is approximately $253,379.

As you could see, knowing what you can afford can help you take steps that seamlessly adapt to your both budget and requirements respectively.

Final Thoughts

Whether it is time to buy a home or refinance an existing one, you cannot overlook the importance of a mortgage payment calculator.

If you don’t have time to use a mortgage calculator or don’t know how to do it, don’t worry, leave everything to PureLoan.

PureLoan is a credible online destination that may provide you the best mortgage rate within a stipulated time. With a fervent crew of mortgage calculator experts, we may quickly and accurately predict your monthly mortgage payment without breaking your bank.

For more details on a home loan calculator, visit https://www.pureloan.com/ & make a profitable investment!!