The financial squeeze means more or less everyone – including the US government – is looking at their spending and trying to find ways to trim any unnecessary expenses.
This means that an increasing number of people are scrutinizing their mortgages to see if they are getting the most competitive deal or whether it would be more cost-effective to move their home loan to another lender.
This is one way in which a mortgage repayment calculator can come in useful, as it can provide an indicator of what the likely installments would be if you switched lenders.
However, it is important to remember that a mortgage calculator is only as good as the information that is put in and is designed to provide no more than a rough estimate of likely future costs.
Despite this, a mortgage repayment calculator can be a great way to get an idea of the differences between deals being offered on the market and reach a decision about which one is the best for you.
To get the best use out of a mortgage repayment calculator, it is necessary to know the interest rate that applies. This can usually be obtained from the lender's website or literature.
Some lenders provide their own online calculators that are pre-populated with the typical interest rate applicable, which simplifies the process somewhat.
All mortgage calculators need the amount being financed, the length of the loan and the interest rate applicable as a basic starting point. Some calculators are more complicated and take into account additional factors such as annual insurance – including principal mortgage insurance – as well as taxes, but these fields are usually not compulsory.
As well as using a mortgage calculator to work out how much the repayments would be for a deal already in the market, it can also be used as a handy budgeting tool.
Those on variable rate mortgages are watching the interest rates with trepidation, with many wondering what will happen to their monthly payment if the interest rate rises.
By simply adjusting the interest rate field, the repayment calculator can help by predicting how much you are likely to have to pay.
For those looking to find a bit more wiggle room in their budget, a repayment calculator can provide an idea about whether they could reduce their repayments.
By playing with various fields, such as extending the term of the loan, those looking to reorganize their finances can get a better idea of what effect various changes may have.
At the opposite end of the spectrum, those with a bit of spare cash may be wondering whether they would be better off overpaying on their mortgage or putting the money in a savings account. A mortgage calculator can show the effect that plowing some extra dollars in would have.
One of the best things about mortgage calculators is that they are free to use and available to anyone who has access to the internet.
Whilst the same information would be available from a mortgage broker, having the freedom to sit and play with numbers and work out the best deal without any sales pressure or time constraints, can be a very valuable tool.
Guest Post by MoneySuperMarket
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