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A loan mortgage calculator is an effective tool that can give you the true picture of your financial condition. It helps you to decide the size of the mortgage that you should take out. Using a loan mortgage calculator is essential because if you know how much you can afford, you can also plan out your finances beforehand. It is important to arrange for your finances before you settle for a house. In this regard, you can take assistance of a mortgage broker that can assist you in shopping around for your dream house.
Let us see how a loan mortgage calculator can help you and why you need it in the first place. There are different types of loan mortgage calculators that can help you when you take out a mortgage. The loan mortgage calculators that are used extensively include the following –
• Rent or Buy
You may be wondering whether renting is a better option than buying. If you want to figure out how your finances will turn out to be if you rent or buy, take help of a loan mortgage calculator. You will be able to find out which is a better option.
• How much do you pay if you opt for 15-year or 30-year loan term?
In case you are opting for 15-year loan term, you will have to pay more each month but the rate of interest will be low. On the other hand, if you opt for 30-year loan term, you will have to pay less but the rate of interest will be high. With the help of a loan mortgage calculator, you can find out the amount you have to pay each month.
• ARM versus FRM
A loan mortgage calculator will help you to find out how much you have to pay if you opt for adjustable-rate mortgage and fixed-rate mortgage. In case of FRM, the amount you have to pay throughout the term of the loan is predictable and fixed. But if you opt for ARM, the rates fluctuate as per rates of the market. And your monthly mortgage payments change.
• APR loan mortgage calculator
APR or the Annual Percentage Rate is the total cost of the loan. Although APR doesn’t affect your monthly mortgage payments, with the help of APR loan mortgage calculator, you can calculate the total loan cost.
Since your finances occupy center stage, it is important to work out your finances well in advance. This is because you have to continue making payments consistently for the entire loan term. And falling behind on payments means you may have to face foreclosure.