Mortgage Calculator: Estimate Your Monthly Payment

 

Are you planning to buy a new house? If so, then it’s incredibly important for you to use a mortgage payment calculator.

This would not only help you determine how much your home will cost per month but it would let you know how much you’ll pay the total amount of interest. 

To check whether you can truly afford your would-be home, estimating your monthly payment is important!

When you choose a credible platform like PureLoan, you can easily determine what your monthly payments would look like.

If you think using a home loan calculator is potentially daunting, then you’re probably mistaken!

All you need to enter the value of your home and the amount of down payment you’re planning to make on the property, and the rate of interest. When you use a mortgage payment calculator, you can get the amount that you have to pay for your home so you can evaluate if this may suit your budget.

How to Calculate a Mortgage Loan Payment

To calculate a mortgage loan payment, there is a specific set of formulas to use.

M = P[r(1+r)^n/((1+r)^n)-1)]

Didn’t understand the formula? If so, don’t worry! Here are the complete components of the formula;

·         M = This is nothing but the total monthly mortgage payment.

·         P = This is the principal balance of your mortgage loan, which is the complete amount of loan that you are borrowing.

 

·         r = This is the monthly rate of interest that you pay on your mortgage loan. When you get your rate from your lender, it will be expressed as an annual rate. If you want to find out what the monthly rate, you simply need to divide your annual rate of interest by the 12 months of the year.

 

Let’s take an instance to understand!!

 

If your annual rate is 4.5%, you then need to divide .0045/12 to get your monthly rate of .00375.

 

·         n = This is nothing but the total number of payments that you will make over the life of your mortgage loan.

By multiplying the number of years of your mortgage loan by 12 months in a year, you can easily evaluate the total number of payments.

Let’s say!

So, if you have a 15-year mortgage at a fixed rate, then you will need to multiply 15 x 12 to get 180 total payments.

When you use a home loan calculator, the biggest factors that may affect the cost of your mortgage payment are nothing but the complete cost of the home that you’re buying, the down payment, and the length of the term of your mortgage loan.

Since you’ll have years longer to pay your loan balance down to $0, a longer-term loan will significantly reduce your monthly payments. Due to all the extra interest that you pay over time, however, your total cost of the loan would be higher.

Because you do pay interest for a very long time with any mortgage, even the slight increase in the interest rate might break your bank over the life of the loan.

Should I Choose a 15- or 30-Year Mortgage?

Always remember that “The length of your mortgage loan may significantly impact the monthly payment and the total cost of the loan”.

Always keep in mind that you can borrow for all different time lengths, but most of the common mortgages are 15-year mortgages and 30-year mortgages. Choosing between the two could potentially be a daunting task so make sure you know the real difference between them.

Let’s take an example to understand!

For a 30-year mortgage, you’re stretching out your loan. Since longer loans are quite riskier for lenders, your rate of interest is usually higher.

For a 15-year mortgage, on the other hand, there would be higher payments because you’re paying off the loan in half of the amount of time.

So, which is the best?

With a 15-year mortgage, you are likely to save significant bucks in the long run and you can then own your own house. Because mortgage interest rates are relatively low for most borrowers, you will be committed to high monthly payments, and paying off a mortgage as quickly as possible doesn’t always make sense.

Bottom Line

So, that’s a wrap to the importance of the mortgage calculator!!

By using a mortgage calculator, you can find out how much house you can afford. Don’t forget to find the best mortgage lender with the lowest rates, so you don’t overpay for your new home.

Don’t have time to do so? If so, choose a professional for mortgage payment calculator like PureLoan!

PureLoan is a leading online destination that may efficiently harness the calculator to know how much your home will cost per month. We have a team of experienced professionals that help you to find out the estimate for your monthly payment for your home.

To know more about services, visit   https://www.pureloan.com/ today!!