Things to know about mortgage calculators

Mortgage calculators are available online and can be very easily used to ascertain how much will be your interest component you will be incurring on the loan amount or how big a mortgage can you afford. But here are a few things you should be very well aware of and consider while calculating your mortgage.

There are a number of misconceptions floating around out there as to what exactly goes in a mortgage payment. This does not help when you are trying to calculate what you owe or will owe in the near future. There are a number of expense which are taken as part of the total mortgage payment. The principal amount and the interest component of course are the major expenses. But mortgage companies also tend to collect on any insurance for the amount, property and estate taxes if applicable and general insurance charges for the entire property. You can look for specific mortgage calculators, which will factor in all these expenses to give you an accurate estimate.

The interest rate you are about to incur on any mortgage taken is influenced by a number of factors. You might not know this, but a slight change in any one of the factors can cause you to pay more or less depending on the type of surge it was. The type of mortgage you have opted for, any previous debts which might be paid or unpaid, your total earnings in a year that is income from all sources, the location where you are planning to take up a home, the actual cost of the home which is again dependent on a number of factors, your credit score and finally the amount of down payment you have agreed to pay for the mortgage. These are all vital factors which will influence the interest rates to a significant extent.

Closing costs are part and parcel of any deal, it is an expense which has to be incurred no matter what. These costs are again dependent on the type of mortgage availed and the location of the property.

Another factor is the taxes that you end up paying, which can actually be shown as deduction to help you lower the effective interest rate. Often people don’t factor in the taxes they are paying, which can be very beneficial when it comes to calculating your mortgage.

A number of mortgage calculators can be found online and on websites of official financial institutions, but be sure to check whether the above mentioned costs are being taken into account while giving you an estimate.