Mortgage calculator: How does it work?
Calculate and plan your mortgage details with our mortgage calculator. With our calculator you enter the home price, your down payment, and mortgage term. Be sure to check property tax rates for your location, and it could be helpful to look into going rates for home insurance as well as PMI. The calculator will add these inputs and run the numbers to provide you with an estimated monthly mortgage payment amount.
Why should you use a mortgage calculator?
As you embark on the home purchasing process it’s important to be as prepared as you can every step of the way. It’s helpful to run your numbers through a mortgage calculator so you have an idea of your budget and how much house you can afford.
This helps you understand what type of houses you can realistically consider, and doing this research ahead of time helps to make sure you’re not caught off guard during the mortgage pre-approval process.
Mortgage Calculator FAQ's
We’ve put together some answers for frequently asked questions regarding mortgage calculators below. If you still have questions, don’t hesitate to reach out, a Power Mortgage LLC agent is standing by ready and willing to answer any questions you may have.
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1 Is this mortgage calculator accurate?
Our mortgage calculator works very well at providing an estimate for what you can expect to see based on the information entered.
It's important to understand this is just an estimate, and to get a more accurate breakdown of what you can expect in terms of mortgage details it's best to get a mortgage pre-approval, or pre-qualification from an actual mortgage lender, like Power Mortgage LLC.
Estimates provided by the calculator above should only be used to provide a general idea that you can plan around to set expectations and begin to understand what you may expect your mortgage information to look like.
2 How do I calculate my PMI?
How much you end up having to pay for PMI can depend on multiple different factors. Whenever you pay under 20% of the total home price while purchasing a home, you must pay PMI as insurance to your mortgage lender to offset the percentage under 20 that was not covered with the initial down payment.
PMI can range from 0.58% to 1.1.86% of the original amount of the loan. As stated above, the amount paid hasn't an impact on the rate of your PMI payment, as well as your credit score.
Due to the flexible nature of what your exact PMI may be, Freddie Mac provides a simple framework to help you estimate: You can expect to pay anywhere between $30 to $70 extra a month per $100,000.00 financed.
Financial details will determine your actual PMI, and you should speak to a mortgage lender to have a accurate representation of that number. Without pre-approval or pre-qualification from a lender, it's possible to estimate PMI and your PMI rate. For example, assume you plan on taking out a $600,000.00 mortgage and had $102,000.00 available to make a down payment of 17% of the home price. After your down payment you would have a mortgage loan balance of $498,000.00.
A down payment of 17% would help ensure you paid a lower monthly PMI, as only 3% of the home price was not included in the down payment. We prefer to round up (better be pleasantly surprised!) so let's assume your credit is fair, and your PMI is 0.64% of your $498,000.00 mortgage loan price. PMI would cost $3,200 a year, increasing your mortgage payments by $266.00 a month, $53.20 per $100,000 financed.
3 What will my mortgage rate be?
Ultimately you will want to work with a lender to have an accurate understanding of expectations for mortgage interest rates. For the sake of using a calculator, it's important to understand how rates are being displayed wherever it is you're looking at them.
Some sites will list mortgage interest rate averages, as we're doing with our calculator above. Others will list specific ranges. One listing site may show the lowest range of current mortgage interest rates, some may show the higher range. It's very common for the sites that display the rates to outline which range they are displaying.
For the sake of estimating and planning, it can be helpful to generate a few different scenarios, and that's when a mortgage calculator can come in handy. This way you're able to set your mortgage interest rate at different levels as you work to understand your estimated mortgage payment and how exactly the mortgage interest rate will impact the amount you pay a month.