Choosing to purchase or refinance your home is a huge decision filled with boatloads of uncertainty. While the process can be very confusing, one of the best tools you can use to gain a better understanding is an interest rate calculator. Interest rate calculators are ideal for helping you figure out the real interest rate of your mortgage with a fixed monthly payment and fixed term. Simply put, interest rate calculators are designed to take the guesswork out of your mortgage payments and can even be used to help you save money. Continue reading to learn more about using interest rate calculators. .
Interest Rate Calculator for Purchasing a Home
When it comes to purchasing a home, a mortgage interest rate calculator will help you calculate your home loan payments. You can access an amortization table to see how much of each payment goes to the principle and how much goes to interest. This information is vital because the first half of your mortgage payments will be mainly attributed to paying interest. Over time, the portion of the payment that goes to the interest decreases and the amount that goes to the principle increases. In any case, an interest rate calculator will help you be more informed, and a more informed consumer saves money. .
Getting Ahead Of Your Mortgage with Split Payments
One of the most cost effective tools for paying your mortgage down is to make split payments. If you use a mortgage interest rate calculator, you will see the savings from paying split mortgage payments. Instead of making one monthly mortgage payment, pay half of the mortgage every two weeks. This practice will result in an extra mortgage payment every year without ever missing the additional cash flow. Best of all, you will notice the obvious positive cash flow when you pay the mortgage off early. Check out this effect with an mortgage interest rate calculator.
Getting Ahead with Extra Payments
In addition to split payments, you can also get ahead on your mortgage with additional payments. Making additional payments is an excellent way to minimize the long-term costs of a mortgage. When you use the mortgage calculator to determine the amount you will pay over the entire life of the loan if you pay the mortgage as scheduled, you may end up paying up to three times the original cost of the property. In any case, an $100 additional payment leads to over $100 in savings on the mortgage, which is the multiplier effect. Simply use the mortgage calculator to realize how much you can save by making additional payments.
Interest Rate Calculators for Mortgage Refinancing
If you are on the fence about whether you should refinance or take out a home equity loan, this calculator can be a valuable tool that will save you thousands of dollars. For instance, many people choose to refinance their home when the interest rates drop so they can take advantage of the lower interest rate, which typically means lower payments. However, just because the interest rate drops doesn’t mean the collective mortgage refinance will be a more financially sound decision because you must consider the effect of the closing costs. An interest rate calculator would provide you with a clear and more precise financial snapshot of how much you would potentially save as a result of that lower interest rate. Then you could make an educated decision of whether the savings from the interest rate would justify paying closing costs.