A mortgage calculator is typically used to calculate payments for a new mortgage, but it can also be used for several other common calculations. Consider these three other mortgage calculator uses.
Considering an adjustable-rate-mortgage
An adjustable-rate-mortgage, or simply ARM, is enticing due to its lower initial interest rate, but don’t be wooed until you plug it in to a mortgage calculator. Enter the ARM interest rate into Bankrate’s mortgage calculator with a 30-year term. Compare those payments to the conventional 30-year fixed mortgage payments. You’ll either be delighted about the possible benefits of an ARM – or pleased to step away from the risky venture despite the potential advantages.
Saying “bye” to private mortgage insurance
When you have 20 percent equity in your home, you can request that the lender waive the private mortgage insurance obligation. Using the mortgage calculator, you can see when you’ll reach this magic number.
Enter the closing date and original amount of your home mortgage and select “show/recalculate amortization schedule.” Multiply your original mortgage by 0.8 and find the closest matching number in the amortization schedule’s far-right column. This is approximately when you’ll have 20 percent equity in your home.
Paying off your mortgage early
Bankrate’s mortgage calculator allows you to enter amounts for “extra payments,” which can shorten your term and save you money. To avoid being the typical 30-year-fixed-rate mortgage holder, whose total interest payments are usually larger than the original principal on the loan, calculate potential savings using the calculator. Enter an extra payment goal in one of the boxes and click “show/recalculate amortization schedule” to see the difference. You could knock off years of your term and save significant amounts of money.