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Reasons To Use A Mortgage Calculator

Mortgage calculators are simply interest calculators so they calculate any type of interest loan that you might have. Credit cards, student loans, home equity loan and a car loan are all examples of loans that can be calculated by using a mortgage calculator. Just simply plug in the amount of the loan, the current interest rate, and the amount of years you plan to have the loan.  Then it will calculate your monthly payment.

You can figure out your borrowing power or your debt to income ratio with a mortgage calculator.  Add up all your monthly debt and your monthly income, whatever left over income you have left is considered your borrowing power.  So if it's $1500 per month then you have to look at homes in that monthly payment range. Make sure to always check the current interest rates because it will change your monthly payment drastically if you're using the wrong rate.

Let's assume you have $2500 left over and you look at the mortgage calculator and see that you will only have a payment of $1100 per month. Now if the rest is just going to savings, then you should think about buying another home and renting it out.  The reason I say that is because you can cover the expenses even if you don't rent it.  If you do rent it, consider it extra cash and you're buying and appreciating a second home!  You could sell it 5 years down the road for a lot more then you bought it for.

Maybe you're thinking about refinancing a home and you're not sure if you should or not. Well, you should use an interest calculator to determine if the lower interest rate will save you enough money.  If it hasn't gone down that much and it will only save you about $50 per month then it might not be worth it. It costs you $1700 to refinance a home so it would take you 34 months (1700 / 50 = 34 months or just under 3 years).  You should be looking for a savings of something more like $150-200. That way you'll make your money back much quicker and you'll really notice the extra $150 at the end of the month.

Your monthly mortgage payment should be watched very closely because it's a big investment to make and you should keep your eye out for the biggest and best savings available. One of my recommendations during this economy is to get into a fixed rate mortgage quick!  Interest rates are very low right now and like anything else, they could shoot up quick.  There's almost NO reason to have any type of adjustable rate mortgage right now because rates cant even go that much lower without going into the negative. 

Be very careful, but very motivated.  The real estate market is going to be a very hot market soon and you should be involved in it. Use a mortgage calculator to figure out your borrowing power and buy another home and rent it out if you can. Hold it for 5 years and wait to see what you sell it for. Trust me, it will be a lot. 




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