Those aspiring to own a new home may not be able to pay outright for the property. Getting a home loan is what most people do to finance a new home. Knowing the monthly payments that will have to be made, duration of the loan and rate of interest is a must. Otherwise, you may over commit yourself and buy a large property for which you may be unable to pay the monthly home loan installments. This will mean foreclosure of your precious home.

To avoid this eventuality, it is important to purchase a home that fits into your salary and expenses comfortably. A mortgage calculator is a good way to find out what your monthly commitments will be. By entering figures like cost of the new house, salary, rate of interest and duration, the calculator will give you a fairly accurate estimate as to how much your monthly payments could be. Have a list of your current and future household expenses and see if you can comfortably afford your home loan.

If you cannot, then lower your expectations and look at cheaper properties and try the calculations all over again. The mortgage calculator can be used like this multiple times to arrive at a favorable figure. There are different calculators available that will provide different data like:

– Regular Mortgage Calculators that can calculate
o Best loan program
o Monthly payment
o Target payment
o Affordability

– Mortgage Interest Calculators that can calculate
o Fixed Rate
o Adjustable Rate

-Mortgage Insurance Calculators

In the first category, the best loan program mortgage calculator will offer different financial options like interest only or down payment amount loan programs and help you select that which will suit your budget the best. The monthly payment calculator will estimate loan amount, taxes and interest and arrive at your monthly mortgage expenses. The target payment calculator lets the user input the monthly payment amount they are comfortable with and then shows different loan programs that will be commensurate with that amount.

The affordability mortgage calculator calculates how much home loan a homeowner can afford to take. This will use the homeowner’s salary structure and current debt amount to arrive at an amount that will suit these figures. There are different interest deals that are offered by financial institutions that will suit different clients. Using mortgage interest calculators, homeowners can check out both the fixed rate [which will remain the same for the duration of the loan] and adjustable rate [which will change depending on prevailing economic circumstances]. This will give them a good idea of their liabilities and they can choose a home loan accordingly.

Using a mortgage insurance calculator will help individuals estimate their mortgage insurance cost over a long period. The calculator determines if the loan will be more or less expensive that a loan that does not include insurance but has a higher rate of interest. All these mortgage calculators are available at different websites and a Google search will give you various options that you can try out for free. Using them can be confusing for the first time homeowner in which case they can seek the help of a home loan expert to help them arrive at the best figure.

Home loans can be obtained through government agencies or private lenders. It is easy to get home loans these days with even real estate investors offering cash to borrowers who may not otherwise qualify for a regular home loan. Borrowers be wary and do not let your desire to own a new home, cloud your judgment. A lot of these hard cash lenders can be very unscrupulous and charge very high rates of interest along with a large initial down payment that could be up to 50% of the value of the property.

Most of these loans will be short term loans and if the borrower is unable to payback, then the property will be seized. There are some government agencies also who offer home loans to those who may not meet the conventional home loan criteria. This could be a safer option and the borrower must offer proof of income, value of the property and source of their down payment as details to avail the loan. Doing proper research is essential so that you do not land up with too high a mortgage amount that you will be unable to pay or worse still, get caught with unreliable and unscrupulous lenders out to fleece you.

Author Bio: Article by John Hoots of ChicagoMortgageSpecialist.com, a website with the best Chicago mortgages and Chicago mortgage brokers information on the web.

Category: Finances
Keywords: home mortgage, mortgage calculator