While thinking whether you are ready to buy a house or you will qualify for a mortgage loan, you can’t restrict you from thinking about the cost. Before taking the big leap, it is always better to use a mortgage calculator in order to figure out the home price that you can afford. A good mortgage calculator can help you determine your most favourable price.
However, there is more a mortgage calculator Texas can do for you. Read on to know about the various features of a mortgage calculator.
- · Feature 1: Break out your monthly payment
You would like to know where your money is going each month. Being a homeowner, you will pay off some principal with each payment. Ultimately, you will pay it down to zero if you keep the home long enough. The rest of your payment is mortgage interest, along with things like homeowners’ insurance that is generally collected with the payment. A mortgage calculator breaks out the cost of each item. You need to include proper information, including the interest rate, price of the house, length of the loan and down payment, and you will see the breakout of the monthly payment. Moreover, you can incorporate property tax, insurance, and HOA dues in order to see the impact they have on the monthly payment.
- · Feature 2: See impacts of lower debt payments
Many homebuyers use a calculator in only one way – to determine the monthly payment. However, an advanced mortgage calculator can help you find out how much house you can afford depending on your annual income. In place of juggling home prices, interest rates, and down payments, you will provide your annual income, regular monthly debts, and the interest rate, down payment, and the loan length. The calculator tells you how expensive a home you can afford, as well as the monthly payment. Lenders often look for a ceiling to DTI, like 43%, in order to know the borrower won’t get in trouble. Many consumers aim for a DTI of 36% to be conventional. For example, if a home buyer owes $500 per month in auto loans, student loans, and other debts, he or she could afford a home of about $215,000. It assumes an income of sixty thousand dollars annually and ten percent down. The same home buyer could afford a home above $285,000 in case they had only $100 in monthly debt payments. This is a purchasing-power increase of seventy thousand dollars with only a $400-per month reduction in other payments. It could be a good idea to make a plan to reduce or remove high monthly payments prior to applying for a home plan.
- · Feature 3: Work backward from your comfortable payment
In place of begging with the home price or income, a mortgage calculator will let you specify a monthly payment, which fits your budget. Then the calculator will work backward to find out the home price and down payment that you will need. You can still make changes to the interest rate, down payment and the down payment. As you do so, the home price will change to reflect the new conditions.
These advanced features of mortgage calculators help you plan your home buying and mortgage applications in a better way so you have a better idea about how much payment will run and how much house you can afford.
Author Bio: Joan Gallardo, a Senior Loan Officer, with 20+ years of experience, here writes on 2 questions to ask the best mortgage lender in Houston when you are about to choose one of the first time home buyer programs in Houston.