Guide to Mortgage Calculators
To get a clear idea of how buying a home will impact your finances, you’ll need to figure out what purchase price you can afford and how it will impact your housing costs. Fortunately, mortgage calculators allow you to model this information, helping you make sound financial decisions about what will likely be the most important purchase of your life.
Why should you use a mortgage calculator?
You wouldn’t buy a car without knowing the amount of the monthly payment, nor should you buy a house without having a clear idea of its impact on your finances.
Owning a home involves more than a monthly mortgage payment, and mortgage calculators can help you determine these additional costs, such as land and land transfer taxes, insurance, and utilities. This information can help you budget and make sure your other financial priorities (like paying off debt and saving for your future) stay on track.
Finally, some mortgage calculators allow you to model different scenarios based on purchase price and location, down payment amount, and amortization period. Playing around with these variables will illustrate how you can save money on your home before contacting a lender.
How to Use Mortgage Calculators
Not all mortgage calculators are the same. Vouchers will help you understand the true costs of homeownership, such as how much you can expect to spend on property taxes and utilities, so you can plan accordingly. Here are the common types of calculators, along with a brief explanation of how they can help you plan your home purchase.
Mortgage Affordability Calculator
A mortgage affordability calculator (also called a mortgage pre-approval calculator) determines the maximum home price you can afford based on your annual income, debts, other living expenses and where your future House.
Check out the MoneySense Affordability Calculator.
mortgage payment calculator
A mortgage payment calculator estimates your monthly mortgage payments based on purchase price, amortization period, down payment and interest rate. The best ones also help you estimate your total housing costs, including property taxes, insurance, and utilities, even factoring in location of purchase.