Is a Mortgage Calculator Really that Helpful?
Only few individuals have the funds to pay a house in full and most can’t; if you are among the latter then you know that getting a mortgage is an ideal alternative. The thing is, being able to find out how much money you could borrow is easier said than done, plus the fact that you have to factor in the monthly payments you have to meet. You may want to use a mortgage calculator if this is among the things that concern you.
The truth is, there are many people globally who are taking advantage of this calculation tool to know how much mortgage they have to settle month after month. Mortgage calculation present some issues to an average person but the calculators are primarily designed for doing this task and thus, you can do calculations of the mortgage insurance, extra payments, hazard insurance, taxes etc in just one place.
When someone uses the calculator, it is vital that they do understand the terms that they may potentially encounter when calculating the amount of mortgage. The 2 kinds of insurance are extremely important because it takes into consideration the borrower and lender of finances. You may be wondering why this is crucial; well it’s because of the fact that it protects the borrower and lender of finances from unforeseen situations.
While PMI benefits lenders of money, homeowners insurance protects the borrower if there’s either major or minor damage to the object in question. PMI on the other hand has to be paid until the balance drops to 78 percent or less and then after, the payment is no longer needed. Yet another less known feature of mortgage calculator but extremely useful is calculating the Homeowners Association or HOA fees. They are being paid by homeowners for a number of purposes such as the maintenance of shared objects similar to hallways, elevators and so on. The amount of this fee will vary from one building to the other and even higher from neighborhoods.
Another significant expense that is calculated in the mortgage on top of the extra fees and insurance is EIR or Effective Interest Rate. This is the cash paid to the lender that is typically a bank for the purpose of lending you cash. This varies from one place to the other and a deciding factor on where to borrow the money from.
In the end, it is still the borrower who will set the frequency of his or her payment. You may opt to pay it weekly, bi-weekly or every two weeks, semi monthly or monthly, depending on your choice but of course, the more often you pay, the higher the interest you can save and the faster you can finish on your mortgage.