This mortgage calculator estimates your monthly payment consisting of principal + interest + PMI & residential tax together with a detailed amortization schedule. More on how to calculate monthly loan repayment plan you can read below the tool.
What is a mortgage loan?
Before finding out how much you can borrow, you should know that a mortgage loan is what we call a loan secured against the home bought with it. When taking such a loan the debtor agrees to pay the principal and the interest, otherwise he loses the home bought with the money financed by the creditor.
What are the terms when speaking about mortgage loans?
- Property is the home value being financed by the lender. The property ownership varies from one country to another.
- Mortgage represents the set of restrictions that the lender establishes for the property being financed. The most important restriction says that the owner cannot sell the house before the pay off date or until a date agreed by the lender by specific terms. Other restrictions may refer to the request to purchase home insurance.
- Borrower is the debtor who borrows the loan amount.
- Lender is the creditor, usually a bank, investor or other financial institution.
- Principal is the amount borrowed.
- Interest is the cost of the money (calculated by a specific interest percent). This is what the borrower should pay for the principal owed, as a charge for using lender’s money.
What are the most important aspects to know about mortgage?
Usually when speaking about borrowing money for a home buy the most important aspects to analyze include:
- Down payment is the amount of cash/savings that the debtor has available to pay when buying a home. Needless to say that the higher the down payment is, the smaller the loan amount needed to be borrowed is. Moreover, the down payment is a sign of creditworthiness for the lenders. Please note that the creditors request you be able to pay at the beginning between 5% and 20% from home’s acquisition price. This percent varies from one country or region to another.
- The amount of money borrowed in order to pay the remaining part of the property value (home price minus down payment).
- Maturity of the loan is the term you negotiate to pay back the principal borrowed. In other words this is the number of years and/or months in which the debtor will pay off the principal and the interest to the lender. Usually, when buying a home the borrower should eighth for a loan term that would ensure him with an affordable payment level. Most of borrowers opt out for a term between few years (10 -15 years) to a maximum of 30 years.
- The debt to income ratio is an important indicator, a creditor always analyses before deciding whether to finance you or not. It indicates the level of debts you have in comparison to your regular income. Usually your totally debt to income ratio should not be greater than 35%.
How can this quick mortgage calculator help?
If the data related to the property value, down payment percent available, desired term and interest rate are given this mortgage calculator can perform all the relevant calculations:
- Monthly payment value consisting of principal and interest.
- Monthly total out of pocket consisting of monthly payment plus PMI insurance and residential tax.
- Total number of payment made on a monthly basis.
- Total interest paid as well as total amount paid for the money borrowed.
- A detailed payment schedule presenting the monthly pay off plan.