Don't Overlook Its Power to Save You Tens of Thousands of Dollars

Generally speaking, we have no control over what interest rates will be. Government policy and the general state of the economy including the inflation rate will dictate the range of interest rates that will be available.

Still, when we go for a mortgage there are things in our credit history that can determine whether we will get a higher or lower interest rate than that of the normal market. Some of the things that determine whether or not we will get a favorable mortgage rate are:

. Our credit rating

. The length or term of the mortgage

. Timing (What the going rate is when we apply)

. How intensely we shop around, and

. Points paid at closing

The power of getting the best rate

While some of these things are determined mostly by how lucky we are, there are certain ways to save tens of thousands of dollars on your mortgage. Take the following example: You have found your bank will loan you $200,000 at the rate of 6% over a period of 360 payments, which is 30 years. With a mortgage calculator, it is determined the monthly payment for this loan will be $1,199.10. Also, it can be calculated over the course of this loan, you will have paid a total of $431,676.00 in principal and interest.

Another possible scenario is the same bank gives you an option to take a mortgage of $200,000 for a term of 240 payments, or 20 years at 5.5%. Here, a monthly mortgage calculator calculates the monthly payment to be $1,375.77. This means over the course of the 20-year mortgage you will have paid a total in principal and interest of $330,189.80.

Calculate your way to savings

You can easily see by taking the 20-year mortgage instead of the 30-year mortgage, you will have saved $100,000. Still, you decide paying $1,375.77 will not fit into your monthly budget. So, you continue your search for the right mortgage.

Another lender offers you a 30-year mortgage on a $200,000 principal. However, this lender will give you an interest rate of 5.5 % instead of the 6% you would have paid on the other 30-year mortgage. Going to the calculator, you'll find your monthly payment to be $1,135.50. Paying this mortgage in full for the 30-year term will cost $408,808.80.

So the difference between this 30-year loan and the other 30-year loan is a little more than $23,000. The only thing you did was look a little harder to find the right mortgage.

Paying a little more each month

Let's go one step further. You decide the first 30-year mortgage's monthly payment, $1,199.10, was an amount you could easily pay. So, you decide to pay this amount each month on the 5.5% mortgage. By doing this, you will have the mortgage paid in 26 years instead of 30. This will result in a savings of close to $30,000 over what you would have paid if you just made the $1,135.50 monthly payment.

Even more interesting is the fact you have already saved $23,000 because you've taken the lower rate. So, by taking the lower rate and paying the higher monthly payment, you will have saved a total of $53,000!

The calculator arms you with important knowledge

Without understanding and making use of the power of a mortgage calculator, a person normally ends up paying top dollar. However, with the combination of knowing just how much money is at stake and being a frugal shopper, tens of thousands of dollars can be saved.

In these examples, we used a mortgage calculator that calculates for monthly mortgage payments. Also, we used a calculator that determines the total amount paid over the full term of a mortgage. There is, however, an interest rate calculator that figures the interest rate when given the principal of the mortgage, the term of the mortgage and the monthly payment that will be made.

This is an important type of calculator to be familiar with because when you know how much money you need to borrow and how large of a monthly payment you qualify for, you can determine the mortgage rate you'll need to get.

Let's take this example: in order for a family to buy a new house they will need to be able to borrow $200,000. A 30-year term is all right for them and they have qualified to make a payment of $1,250 each month. By using an interest rate calculator, it is determined that they need to find a mortgage whose rates is no more than 6.392%.

With this knowledge, the potential borrowers have a predetermination of exactly what mortgage they will need to find. In this case, there's no doubt they'll find the right mortgage and will not be talked into taking one over their heads. This is another one of the powerful, money saving uses of a mortgage calculator.

By Ed Lathrop

How To Figure Out Mortgage Payments Without a Mortgage Calculator

In today's world, taking out a mortgage is necessary for anyone who wants to invest in real estate or simply wants to put a roof over his head. Usually, to find out what a mortgage payment will be on a particular property, a potential buyer needs to contact a realtor or bank to get a quote.

By contacting either one, the buyer risks harassment from a realtor who won't let go of a qualified buyer, or a lender who needs to lend mortgage money to stay in business. Any buyer in his right mind will only go to one of these salespeople when he is ready to go full speed ahead toward a closing.

So, what does a person who is in the early thinking stages of buying a home do? How do you know what the payment will be on a house a seller is asking $250,000 for when the bank is advertising 30-year mortgages at 7%?

By the end of this article you will be making such a calculation in your head. You will be sprouting out the answer to complicated home buying scenarios just as fast as you can find the terms on the mortgage and the price on the house.

$66.53 a Month

First, remember this: $10,000 borrowed for 30 years at 7% will require a monthly payment of $66.53. So, it stands to reason $100,000 for 30 years at 7% requires a monthly payment of $665.30. Also take note you could figure out on a piece of paper with a pencil, $50,000 for 30 years at 7% is $332.65.

Knowing these figures, you automatically know a $250,000 mortgage at 7% for 30 years will require a payment of $665.30 (for $100,000) and another $665.30 (for the next $100,000) and $332.65 (for $50,000). This means the payment will be $1,663.25, or really, really close. A mortgage calculator gives the answer as $1,663.26, but for a wild guess, I'll take it.

A 6% or an 8% Mortgage

Of course, here you ask, "What if I find a mortgage with a lower interest rate?" Well in that case, remember this, $10,000 borrowed for 30 years at 6% costs the borrower $59.96 a month. This means a $1,000,000 mortgage for 30 years at 6% will be 100 times $59.96 or, a monthly payment of $5,996.00. Now, certainly that was easy. All we had to do was add 2 zeros!

Okay, what about if the interest rate is 8%? Here, a 30-year mortgage for $10,000 is $73.38 each month. So a $300,000 mortgage will come at a cost of 30 times that or, $2,201.40 a month.

How About a 7 1/4% Mortgage?

In reality, most times interest rates will not be exactly 6 or 7, or 8%. Even when this is the case, you still don't need a mortgage calculator. If you read about a 30-year $260,000 mortgage at 7 1/4%, for instance, and you want to know what the monthly payment will be, here's what you do. Are you ready? Guess!

That's right! Just guess! You know 7% will cost you $66.53 per $10,000 a month and 8% will cost $73.38 per $10,000 a month. You also know 7 1/4 is somewhere on the lower side between 7 and 8 so take a guess how much 7 1/4% will cost per $10,000 a month. My guess would be maybe, $68.50?

I'll go with that. So, since it is a $260,000 mortgage we're trying to figure the payment for, we will multiply 26 (260,000 / 10,000) X $68.50. The answer is: $1,781.

When I run $260,000 at 7 1/4% for 30 years through a mortgage payment calculator the answer comes out $1,773.66. So, our answer wasn't precisely right, but it was pretty close.

In a case like this, even if we came out with an answer that is $20-$30 off, who cares? Before the real mortgage payment is determined, the cost of a homeowner's insurance policy and property taxes will have to be calculated anyway. So, the best anybody can do at this point is guess.

There you have it. Now, you're a human calculator! As long as you're only concerned with 30-year mortgages, and today's going interest rates, which are 6% to 8%, you can figure out mortgage payments in your head, or maybe with just a little help from a pocket calculator. Congratulations!

By Ed Lathrop

How to Calculate Your Monthly Mortgage Payment

Just starting to shop for a new home? Do you want to know how to figure what your monthly payment would be based on a certain priced home? No problem, there are plenty of mortgage calculators on the web you can use free of charge. All you need to know is the mortgage amount, sale price less the down payment, interest rate (also easy to access on the web), and the number of years you wish to finance your new home, usually 30 years (360 months) is the maximum term. Simply input those numbers into the mortgage calculator and voila you have your monthly payment calculated for you. Can you see the advantage of knowing what your approximate monthly payment is going to be while your home shopping?

If you’re thinking about refinancing your current mortgage
loan a mortgage calculator can be a great tool for you. You’ll need to know what your existing home
loan balance is, a current mortgage loan interest rate, and the number of years
you wish to refinance your home loan. Now pay attention to this for you could really help yourself with this
information. Use the mortgage calculator to calculate the monthly payment and compare it to your current payment; if the
new payment is less, you might consider refinancing your current mortgage
loan. Better yet, take your existing home loan balance and add your credit card and / or other debt balances
together then calculate a payment and compare this payment to your current home
loan, credit card, and / or other debt payments. The new payment may be hundreds of dollars
per month less. Again, you might consider refinancing your current mortgage loan and pay off some of your other
debts too. Please consult a mortgage professional for all your mortgage needs.

By Marc Sisk