Mortgage Calculators Useful for Determining Affordability

You're ready to buy a home, refinance, or get a home equity loan. How do you figure out how much to borrow? Mortgage companies provide online mortgage calculators to help you do the math before shopping for a home or home loan. One of the most useful mortgage calculators is an "affordability" calculator. These are designed to compare the information you enter to underwriting standards used by mortgage companies to qualify customers for a mortgage or home equity loan.

How Do I Use a Mortgage Calculator?

Affordability calculators require information such as your annual gross income, amount of monthly debt payments, and estimated amounts for property taxes and hazard insurance, and closing costs.  Typically, mortgage companies and/or real estate agents can help you estimate these costs based on market trends, and local taxation rates and insurance costs.  It's critical that you know and accurately report your monthly debt payments when using a home affordability calculator. Mortgage lenders use ratios of your income to debt to determine how much you can responsibly qualify to borrow. An amortization calculator can help you see how your payments will be applied to your mortgage balance. You can also expect your mortgage lender to review your credit report. Buying a home can be a very exciting experience, but it's important to base your decision on what you can reasonably afford, and to avoid getting in "over your head." If you cannot qualify for a mortgage right now, a credit counselor or financial advisor can help you prepare for homeownership. Mortgage companies may also sponsor home ownership workshops in your area.

Posted By :
Karen Lawson is a freelance writer with extensive background in mortgage banking. She holds BA and MA degrees in English from the University of Nevada, Reno.

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