Mortgage Rate Calculators

Using a Mortgage Rate Calculator:
A mortgage rate calculator helps loan-seekers to calculate how much they can borrow, the exact amount of monthly mortgage payments they will need to make and what the interest rate will be. Most of the leading companies offering mortgages have a web presence and their websites sport online mortgage calculators to make life easier for prospective clients. You enter the required information in the given boxes and then click to get the result.

Getting a Mortgage:
There are different reasons why people get a mortgage. Two of the most common ones are to finance a new home and to consolidate various debts to ease up the financial situation. Whatever your reason for getting a mortgage, it is important that you know what you are getting into. To start with, make a note of what your budget is, how much you need to borrow and how much you can realistically afford to pay every month. For example, if the monthly payments come up to $3000, could you meet that and still live well enough? There are also many unforeseen things that could happen in the future – you could lose your job or fall sick – in which case, do you have enough savings that will help you make the monthly payments?

You need to know what kind of mortgage will suit your situation, what is required to qualify for it and what the repayment options are. It is a good idea to shop around and check different mortgage rates offered by different finance companies so you can get a deal that offers the lowest monthly payments.

The following factors determine the amount you can get on loan -

• Your current income
• Your history of debt repayment
• Your existing debt
• The interest rate

Choosing the Right Mortgage:
Take your time in choosing the right mortgage. As mentioned earlier, shop around, find out what types of mortgages are available and what type will suit you. If you are getting the mortgage for a home, for example, ask yourself how long you plan to live in that house – for a couple of years or long-term? Choose your mortgage accordingly – an Adjustable Rate Mortgage might be a good idea for the shorter duration and a Fixed Rate Mortgage for the longer one. Before you make your application, make sure you understand all the details involved. Ask the finance company agent to explain any point you don't understand. Better yet – or also – contact an independent finance counselor to help you decide. Getting independent financial counseling is mandatory if you are seeking a Reverse Mortgage.

Different Types of Mortgages:
Let's look at the different types of mortgages. There are actually two basic kinds of mortgages – Fixed Rate Mortgage and Adjustable Rate Mortgage (ARMs).

The main difference between the two is as follows -
With a Fixed Rate Mortgage, the interest rate stays the same for the duration of the loan and you have to pay fixed monthly payments. The good thing about this is there are no surprises; you know exactly how much you have to pay every month.

With an Adjustable Rate Mortgage, the interest rate may fluctuate month by month and so accordingly will your monthly payments. It's great for you if the interest rate dips and your mortgage payments go down, but, on the other hand, the interest rate could shoot up too. You need to think about that before you go for this type of mortgage. The reason some people like ARMs is that, aside from providing fodder for your appetite for risk, they also have lower initial interest than a typical 30 year mortgage.

Then there are -

Interest Only Mortgages - These have adjustable interest rates. You pay low mortgage payments on the interest initially, and then, after the Interest Only period ends, the monthly payments shoot up as you pay off the principal.

Balloon Mortgages – These are easy to qualify for, have low interest rates and are for a 5 to 10 years duration. You're allowed to drift along in that period making tiny repayments towards your debt. The only thing is, once the Balloon Mortgage ends, they expect you to cough up the remaining balance. How you do that is your headache. Refinance or sell the house.

Reverse Mortgages – These are meant to help senior citizens transform some of their home equity into ready cash. In a Reverse Mortgage, you receive payment from the lender based on your age, the value of your home, the interest rates and lending limits if there are any. You don't have to sell your house or give up the title for it, and you can receive the payment in monthly installments, all at once, as line of credit or in a mix of these options. You don't have to make any payments on the Reverse Mortgage for as long as you reside in the house, but interest continues to be added to the outstanding balance for the entire period of the loan. The lender must be repaid the full amount when you move out or when you sell the house or when you or your spouse die.

Be very cautious about getting mortgages like Option ARMs, 2/28 or 3/27 ARMs, 40-50 year loans, Interest Only loans and Jumbo loans. These sound attractive as they either offer minimum payment options, spread out the repayment for a longer duration, require you to pay only interest initially or offer you a large lump sum of money all at once. But you should know that paying minimum payments month after month makes little dent in repaying your loan, that interest rates usually fluctuate and not to your benefit, that making large monthly payments is tough on the lifestyle and you may end up paying a whole lot more than you borrowed.