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Mortgage Calculator: Interest Rate and Loan Calculator

Most people who take out mortgages aren't loan officers or finance gurus. And the huge variety of loan products with innovative and often confusing terms doesn't make it any easier to pick a loan and buy a house. How do you avoid making costly mistakes?

Check Current Rates for a New Mortgage

First, check with several lenders, either online, by phone, or in person. Stick with reputable companies and avoid unsolicited "too good to be true" offers. A good loan officer will ask you questions, like how long you plan to own your home, what you pay for housing now, and how good your credit is. This information, along with your income, expenses, and savings helps determine how much house and mortgage you can afford.

"Test Drive" Loans with Online Mortgage Calculators

Mortgage calculators are great tools that can help you see how the loan you choose affects your payment, and how quickly you will be able to pay off your mortgage.

For example, you have decided that you can comfortably pay $2,000 a month for housing, excluding property taxes and insurance. You have three different loans to choose from: a hybrid ARM fixed for 5 years at 5.375%, a 30 year fixed loan at 5.875%, and a 15 year fixed mortgage at 5.5%. Input these rates and terms into a mortgage payment calculator, and play with different loan amounts to see what gives you close to a $2,000 payment. You'll see how much you can borrow with each loan. In this example, you'll end up with loan amounts of approximately $360,000, $335,000, and $245,000. The 5/1 ARM allows you to buy more house by giving up some stability in your loan interest rate. The 30 year loan offers the most stable payment but you can afford less house. The 15 year option allows you to pay the loan down faster and pay less interest over the life of the loan, if you don't mind buying a much cheaper home.

Choose the Mortgage that Meets your Needs

Now you know how different loan rates and terms affect your payment. Choose the mortgage loan that offers what is most important to you, whether it's maximum purchasing power, stability, or equity building. Work with a loan officer you trust to finalize your approval. Then shop with confidence for your new home.


Posted By :
Sheryl Landrum is a Loan Officer in San Diego, California and a freelance writer specializing in mortgage issues.


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Today's Best Mortgage Rates

Product

Today

+/-

Last Week

5/1 ARM

3.18 %

3.15 %

15 Year Fixed

2.65 %

2.59 %

30 Year Fixed

3.85 %

3.86 %