When trying to better understand the available home loans in the Greater Boston area, a mortgage loan calculator can make the task easier.
A mortgage calculator is a quick online software tool to help you understand your loan or potential loan. You use it to calculate the knowable facts and statistics about your loan (such as APR, Borrowing Ability, Closing Costs etc.), allowing you to change different aspects of the loan to be prepared for possible future situations. In addition it allows you to compare various loan products to narrow down the choices.
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Broad General Types of Calculators and What They Can Tell You
- Amortization Calculators: These calculators are meant to be used by those looking to get a normal mortgage loan i.e. one where you will be paying both the interest and building up the equity of your house. They will usually require an input of the total loan amount, time period of loan, loan start date and the interest rate of the loan. The end result will be in a tabular form, and show you how much you will pay as interest over the period of the loan, how much balance remains to be paid during any specific month (these calculators are not for mortgage loans alone, so they will be usually called amortization calculators!).
- Interest Only Calculators: If you are interested in going in for an interest only mortgage loan, you will have to pay only interest (a flipside being that you will not be building up house equity). This simple calculator will suffice, and will usually require only the total loan amount and the interest rate as inputs.
- Closing Cost Calculators: When you apply for a mortgage loan, you will, in addition to the interest and base loan amount, be paying closing costs that need to be part of the total financial picture. These closing costs will be for evaluations, escrow, insurance etc. If you want to find out approximately how much you are paying in closing costs, then use this type of calculator.
- Borrowing Limits: You may not need the lender to tell you how much money you can actually borrow. If you are not overextending yourself, chances of you getting the loan will be higher. To find out how much you can borrow, start with one of the above calculators to find out how much you will have to pay every month, then use a borrowing limit calculator to find out if your current income will suffice to make the payments. If your income is not sufficient, in most cases the lender will not take the risk to provide you with the loan!
- Value to Loan Ratio: These calculators provide you with a general idea of the amount you are actually borrowing in relation to your houses equity. The amount which a lender lends depends largely on this factor, since they need to know that in case of a foreclosure, they can make back the money which they lent you.
- Comparing Loans: One of the best methods for comparing mortgage loans from Boston is based on the Annual Percentage Rate (APR). Use a APR calculator for this. In some cases it may be better to go in for a loan with a higher APR, but it can clarify the differences between types of loan products on this score at least.
Mortgage calculators of different varieties are present on our site; each calculator is offered with a specific aim in mind. So make sure you are using the correct calculator for your loan.
Lender Tip: If you don’t know which mortgage calculator is applicable to the loan type you’re thinking about, or you want to compare numbers, then call!