Mortgage calculators: Planning for buying your first home

You've opened a dedicated savings account for buying your first home, but the question is, how much will you need to save? Using mortgage calculators can help with estimating closing costs, and determining how much you'll need for paying property taxes and insurance. You can also compare payment amounts by using a mortgage comparison calculator and entering different mortgage rates. Here are some things to consider when planning your savings goal for buying a home.

Using mortgage calculator tools: Only part of the picture

Mortgage calculators provide generalized estimates based on information supplied. Individual results can differ according to individual circumstance . Here are variables that can impact how much you'll need to save:

• Credit scores and down payment amount: Higher credit scores and down payments lead to lower mortgage rates. Researching your credit scores and credit reports can help with determining how much you'll need to save (or spend paying off consumer debts.)
• Property taxes, mortgage insurance, and hazard insurance: Most first time buyers aren't in a position to put down 20 percent of their purchase price plus closing costs. Taking out a mortgage for more than 80 percent of your new home's present value means that you'll be required to pay property taxes and insurance as part of your monthly mortgage payment. Mortgage calculators typically limit calculations to principle and interest payments only. Mortgage lenders can estimate how much will be required for paying these expenses through mortgage payments or on your own.
• Additional assessments: Local governments may assess homeowners additional taxes for public improvement projects. These expenses are not included in amounts collected for payment of your property tax bill.
• Home maintenance and repairs:lawn care, painting, trash collection, and minor repairs.
• Energy: Heating and cooling a home may be more expensive than keeping an apartment comfortable, or sharing expenses with roommates. Utility companies and the federal government may offer incentives for using green energy options. Discuss these programs with your utility company when establishing service for your new home.

Plan your savings accordingly; using a mortgage prequalification calculator can also help you determine how much you can afford to borrow. Starting out with some savings can help you avoid incurring more debt during the first years of home ownership.