If you’re planning to buy a home, you’ll need to know how much you can afford to pay. An experienced mortgage broker can help you arrive at a budget. But, if you’re not buying immediately, you may find an online mortgage payment calculator an excellent tool. So, what benefits do mortgage calculators offer? Read on to learn about online mortgage payment calculators’ unique benefits and shortcomings.
Benefits of Using a Mortgage Payment Calculator
There are three primary reasons to take advantage of free online mortgage calculators.
Determine Your Home Budget
Knowing how much home you can afford is an enormous time saver. When you use a mortgage calculator, you’ll begin by entering the price of a home. (Incidentally, in Oregon, the median home price in June 2022 was $522,700.) You will then enter your income, monthly expenses, proposed down payment, and approximate credit score. Most online calculators will auto-fill an interest rate for you. The calculator will then generate your monthly mortgage payment.
Remember that the monthly payment may not include all fees for appraisal, title, HOAs, and other costs. Based on the monthly payment generated, you can increase or decrease the home price in the calculator to create new results. Knowing what price range you should be shopping in will prevent you from wasting time looking at homes priced beyond your budget.
See How Down Payments Impact Your Mortgage
A second key benefit of using a mortgage payment calculator is that it allows you to see how your down payment impacts your monthly mortgage payment. You can use the calculator to enter any amount you want as a down payment. Then try entering a larger or smaller down payment to see how it impacts your monthly mortgage. However, remember that the minimum down payment for non-military homebuyers is generally 3.5% of the home price, and that’s only available through FHA loans. VA loans in Oregon don’t require a down payment.
Compare a Few Different Loan Options
Depending on the mortgage calculator you use, you may be able to see interest rates and monthly payments for a variety of loans. But this is a double-edged sword in some respects. Established mortgage brokerages will have access to a more extensive selection of loan products. So although you can get some idea of your monthly responsibility, don’t let the results discourage you from pursuing a conversation with a mortgage broker. There may be other options available to you.
Are Mortgage Calculators Accurate?
The downside of using a mortgage calculator is that they use an algorithm, so they are far from perfect. Likewise, mortgage calculators may not include private mortgage insurance payments. They may not include condo fees or HOA fees. They may not include closing costs or property taxes.
Pay attention to the interest rate that the online calculator auto-fills. Older calculators may auto-fill with interest rates that are no longer available. Using your results from a calculator as a loose guide instead of the final say is best.
Get Help Budgeting for a Home Purchase in Oregon
Strategic Mortgage Solutions encourages all future homebuyers to tinker with mortgage calculators. But it is essential to take your results with a proverbial grain of salt. Many variables can impact the price of a home you can afford, the down payment you need, and more. So, before you put too much stock in an online calculator, schedule a free consultation with our experienced team of Oregon mortgage brokers. Call 541-275-1148 or send us a message online.