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How To Use A Mortgage Calculator
A mortgage calculator is a very useful tool to use when buying a home or seeing if you can afford a home. You probably know about what you can afford per month which is roughly your monthly debt to income ratio. Make sure when you're using the mortgage calculator that you don't forget to include taxes, insurance and condo fees if there are any. if you can afford $1,500 per month then try setting aside about $300-400 per month for savings or spending money and use the rest to figure out what you can afford monthly.
Start plugging in the prices of homes that you think are in your price range to see if it's a mortgage payment you can handle. If not then adjust the mortgage amount or the interest rate to see where you need to be in order to afford it. The number amount that you can afford based on your monthly income is called your borrowing power with the bank. It's a good number to know before you actually go to the bank so that you can speak intelligently about your loan.
You can also use a mortgage calculator to get an amortization schedule of your mortgage. It will break down the monthly payment into principal and interest. Most people know that with any type of loan you'll be paying more interest in the beginning of the loan and less at the end. The reason is because you owe more in the beginning of the loan and as you start paying down the principal then you pay less interest.
Once you have already bought a home then definitely take a long look at an amortization schedule to see how long it will take you to pay off your mortgage. You can even plug in an extra principal payment that you want to add to the mortgage each month. The mortgage calculator will tell you how much quicker you'll pay off your loan and also how much money you'll save in interest payments. You'll be amazed at your savings and amazed again when you see how many years it will cut off your mortgage.
When you're using a free mortgage calculator make sure you check all the current interest rates from different lenders because even a 1/4% better interest rate will save you over $8,500 on a $150,000 home and 1% would save you over $33,000. Putting an extra down payment will help lower you monthly payment and also save some interest. If you're able to put a down payment of at least 20% then you can avoid PMI, which is Principal Mortgage Insurance. Th reason for charging you PMI is because if you don't have 20% of your mortgage paid down then you're a higher risk for the bank to lose money if you don't pay the mortgage. | 
