Types of Mortgages
Most mortgage loan calculators can help with two types of mortgages: fixed rate mortgages and interest only mortgages. A fixed rate mortgage gets paid-down (or amortized) over time, so you’ll want to get an amortization schedule along with payment calculations. The mortgage loan calculators below will help you with most mortgages:
- Loan Amortization Calculator (for fixed rate mortgages)
- Interest Only Mortgage Calculator
Closing Costs
When you get a mortgage, you always pay. Most people know that they’re paying interest, but you might also pay closing costs. Even if you don’t pay fees for closing costs you’re paying them - they’re just hidden by a higher interest rate.
To compare loans, use a mortgage loan calculator that computes Annual Percentage Rate (APR). Keep in mind that you don’t always win by choosing the lowest APR.
How Much to Borrow
You should also use mortgage loan calculators to determine how much you can borrow. Lenders don’t want you to get overextended. Start with one of the mortgage loan calculators above to calculate your monthly payment, then figure out if your income will support the payments. If you don’t have sufficient income, you won’t get the loan.
Home Equity
Finally, get an idea of how much you’re borrowing relative to your home’s value. You can generally borrow up to about 80% of your home’s value. Sometimes you can get away with more, and sometimes you’re limited to less. The bank decides how much risk they’re willing to take and limits your loan to value ratio accordingly.
Do it Yourself
You don't have to use a pre-built mortgage loan calculator. You can build your own models with a spreadsheet, or even do the math by hand. To get some ideas, see How to Calculate Mortgage Payments.
Once you get a handle on all of the factors above, you should run several what-if scenarios with a mortgage loan calculator. Compare quotes from a variety of lenders, and pick the best deal.
