A Home Loan Calculator for Effective Real Estate Shopping

You may think that a home loan calculator is only appropriate after you’ve chosen the home, found a lender and are ready to figure what your payments will be. In truth, a home loan calculator can be an incredible source of information before you ever look at your first house.

Home loan calculators take several pieces of information and generate solid figures that can help you shop effectively for homes that are actually in your price range. The information you need includes price, amount of down payment, interest rates and length of loan. That’s why many people think a home loan calculator isn’t worth anything until after they’ve chosen a home and a lender, but consider how the calculator can help you narrow your search.

Start by using the home loan calculator to figure how much you have for a down payment. Next, make a rough guess as to how much you hope to pay for a house. Use an average interest rate being advertised by several lenders, and plug in a length of time you hope to have to pay off your mortgage. Your answer will be the monthly payment. Using that figure, you can experiment with the numbers until you get the payments in your price range.

And how does this help? If you’ve had in mind that you’d be able to afford a home in the $200,000 range, but the home loan calculator indicates that the monthly payments will be out of your reach, you’ll know to start looking at less expensive homes.

Remember that there are likely to be some additional expenses (insurance and taxes, for example), and you can’t expect to get exact figures until you have solid figures for the price, interest rate and length of loan. But using a home loan calculator can certainly help you get a good idea of what to expect before you waste valuable time looking at homes you can’t even afford.

Also be sure to check out our pages about What Is A Home Equity Loan, Home Mortgage Loan, Home Equity Loan Rates, and Home Improvement Loans, elsewhere on this site.

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