Mortgage calculators are great...as long as you plug in the right facts and figures. They help you make important financial decisions throughout the mortgage process, like which house you can afford, so it’s important to make sure your calculations include all the smaller costs that you might not think about off-hand, and may not be included in all mortgage calculators. But what exactly are these extra facts and figures to consider? First, check these expenses off your list:
- Principal payments
- Interest payments
- Insurance
- Real estate taxes
- Private mortgage insurance
Although these costs are pretty standard across the board, it’s important to also consider the following costs (if applicable to you) when using a mortgage calculator:
- Homeowners' Association Fees: If your home or future home is part of a Homeowners' Association, there are typically costs involved for extra services the association provides, such as lawn mowing and added security. This is a significant factor to consider when making purchasing decisions, especially because these costs can change over time.
- Interest Rates: If you don't know your interest rate, talk to your local lender. Interests are often affected by various factors, such as the amount of the down payment, your FICO credit score, the cost and location of the home, your income, your debts, and the type of mortgage. It is essential to calculate with the correct mortgage rate so that your monthly payments and total loan payments are accurate and don’t impact your other finances after-the-fact.
- Closing Costs: These costs are often left out of mortgage calculators, though they are significant. They can be affected by the home's location, purchase price, down payments, etc. Sometimes, you can negotiate with the seller to have some of the fees paid for at the time of closing, or to close towards the end of the month when prepaid fees are smaller.
Overall, keep in mind that the accuracy of your numbers can have a significant impact on your financial state, so it is valuable to really sit down and make sure each individual number is correct for your particular property. By including all of the factors listed above, you are one step closer to an accurate and complete picture of your mortgage estimate. For more information about home financing, or to learn more about mortgage calculator tips and tricks, contact one of our mortgage specialists today.
