If you are about taking out your first loan then it is important that you determine how much you can borrow. This is important because you may not want to go for home mortgage that would eventually plunge you into debt. This, surely, will not give you the peace of mind that you want. Therefore, using a mortgage calculator can help you determine the exact amount of loan or mortgage you can borrow for particular period. Here are details about this tool you need to know.
For a start, a mortgage calculator is an online tool that can help calculate the value or worth of a mortgage. It has provisions or spaces where you can insert details which will help to provide the final result after calculations. The details to be inserted depend on the nature of the calculator because there are different types of calculators designed by different types of companies or which you will find in different websites.
A typical mortgage calculator will have the following components or provisions:
- Monthly income (salary/wages)
- Other income (overtime/bonuses
- Monthly Home expenditures/bills
- Other monthly expenses (auto expenses, medical bills, etc)
- Credit card payments and other related expenses
- Amount of deposit
- Value of the property
- The tenure/ term for the loan (number of years)
- Estimate of the amount you wish to borrow
- Interest rate charged by the lender etc.
With the above provisions, the tool or calculator can use the information provided work out how much I can borrow. It should be noted every calculator may not require all the above information, some of them will simply utilize some very few information like the term (number of years), interest, income earned, and the expenses to provide you with the amount needed.
Importance of the mortgage calculator
From the details provided above you already can deduce the uses of the mortgage calculator which include:
- generating the amount of amount mortgage or home loan you are entitled to borrow
- Generating the maximum monthly mortgage payment, this is the addition of the Principal, and the interest rate.
- It saves you time and energy of having to shop from one lender to another in search of the best deal.
Finally, Mortgage Calculator can answer your question of How Much Can I Borrow question. Before starting looking for a lender, apply this tool today.