If You Think You Can’t Afford it; Chances Are You Can’t

The prospect of home ownership requires some serious financial soul searching. Before you even go shopping, you have to first figure out what you can afford. Maybe you’ve done this already and the prospects don’t look good. You know better than anyone and if you think you can’t afford it, chances are you can’t. The good news here is that there are some simple online tools that can help you make that decision. The tools are calculators that can determine your debt to income ratio, how much you can borrow and how much your mortgage will be and the term.

          First find a debt to income calculator, it’s the percentage of your gross monthly income that goes toward paying your debts. Input how much you make monthly and who you’re indebted to and for how much. Be sure to include all of your obligations such as mortgage payments, insurance and taxes, car payments-including taxes and insurance, credit card payments, student loans, alimony or child support. The lower percentage the better, it shows that you’ve been a good steward of your money and may qualify you for a better rate. A borrowing power calculator can determine how much you qualify to borrow based on your total income versus your debt obligations. You can use this in conjunction with a debt-to-income ratio calendar to help set goals and make you look as good as possible to lenders. Finally, you can calculate your mortgage by filling in the principal, interest rate and the term and you get an estimated monthly payment. You can compare interest rates, terms and varying down payments.

          If you’re dreaming about home ownership, online calculators are a great place to begin. You may be pleasantly surprised at what you can afford.

How a Mortgage Calculator Can Help You Understand The Buying Process

So you’re dreaming of buying a home. Are you ready? Do you have any idea where to start? If you’re unfamiliar with the steps involved in buying home, then the Internet is a great place to begin.

Search for mortgage and borrowing power calculators, they’re the perfect tool to help you understand the lending process.

          Nearly all financial institutions making home loans will have calculators on their sites. Before you apply for a loan you can figure out how much you can borrow with a borrowing power calculator. It allows you to compute how much you can borrow based on your income and debts. It allows you some insight into the difference between good and bad debt and how that debt affects your credit rating and how much you can borrow. You’ll see in the results how credit card debt, available credit and your debt-to-income ratio can make you look like a risk to lenders. 

          A mortgage calculator can help greatly in understanding how mortgage loans work.  You input the principal (the amount the borrowing power calculator estimated you could borrow), rate, term and down payment. You can compare all these variables to get a picture as to what you can afford to pay each month. To get a truer picture, look to see whether the calculator considers property tax or insurance.

Most will include an amortization schedule that breaks down over time how much of your payment goes to the principal and interest.

          Using these online calculators is a great way to gain some understanding about how lenders gauge risk. They can help you in setting goals to make yourself and your finances look attractive as possible to lenders. What you learn and apply will make your finances shine, showing that you’re a responsible borrower, worthy of great mortgage terms.

Should I spend All of my Savings on the Down Payment?

Buying your first home can be an exciting and overwhelming experience. You’ve managed your money and credit and have a great score, so you’re certain that you’ll get a great rate. You’ve also accumulated a nice down payment. And you may be wondering: Should I spend all of my savings on the down payment?

          It may be a hard decision whether to put all your savings into a down payment, especially if the extra cash will get you a better interest rate. The good news here is that some of this decision comes down to math. If you’re on the fence, check out a mortgage calculator. Use this prevalent online tool to see just how much you would actually save over life of the loan by inputting varying down payments.

          If home-ownership is your goal, then you know that buying a home takes more than a down payment and a good credit score. If you put all your money down on the home, will there be any left over in case of an emergency? Think about it. If you should fall ill after you’ve taken on a mortgage and have no savings, how will you pay the mortgage? How will you eat? Most financial professionals recommend an emergency fund amounting to at least 6 months of expenses. If your mortgage payment is $1000, then you’ll need $6000 just to cover the mortgage, not to mention food, insurance, utilities and car related expenses. It can add up fast.

          You’re buying a house, right! You may need that money for repairs, furniture, property tax or higher utility costs. You may be surprised by some of the expenses that may pop-up. In the end, every financial situation is different, be sure to thoroughly assess yours before making such big decision.

Ways To Lower Your Mortgage Payment

It seems like during and after the housing crisis, those looking to buy were in the best position. Mortgage rates lowered, the government offered incentives and builders were practically paying shoppers to buy their homes. What about families already in a home that want to take advantage of the low interest rates? Well, luckily there are easy and hard ways to lower your mortgage payment. 

          A popular way to lower your mortgage payment is to refinance. This option may not be right for everyone. But may be ideal if your financial situation has improved. If you’ve paid off a large balance on a credit card or your income has increased then perhaps you’ll garner a better interest rate than you had before. This method may work especially well if you have a lump payment that you can apply toward the principal.

          You could also extend the term of the loan. Extending the term five years on a 15-year loan can save you over $100 on the monthly payment. However, by increasing the length of the loan, you pay and extra $20,000 in interest.

          If you don’t want to stay in your current home, there are also options.  You could downsize to a smaller home with less mortgage. One interesting option is to buy and live in a multi-unit rental property.

You can live in one unit and put the rent you collect from other units toward the mortgage. If this type of situation is right, you could avoid putting any money toward the mortgage at all. But you will have to deal with tenants.      

          What are you waiting for? Interest rates are still at historic lows.

Take advantage of the situation, talk to your financial institution about ways you can lower your mortgage payment.

Calculate Your Mortgage Payment Before You Buy

The home-buying process starts long before you go shopping for a potential new home. It could take months or years to save for a down payment or improve you credit rating. Perhaps the most important and easiest thing you can do throughout this process is to calculate your mortgage before you buy or try to buy a home.

          An online search for free mortgage calculators will quickly give you many choices. Try your financial institution or others that you’d like to borrow from first. These calculators are great in that they allow you to input different variables like down payment, time and interest rates to help you get an idea of what your monthly payment will be. Conversely, it can help you determine how much home you can afford by inputting the amount you can currently afford to pay on a mortgage. Many sites show an amortization table to help you better understand what part of the money goes to principal or interest over the length of the mortgage.

          There are other types of calculators that can be used in conjunction with the mortgage calculator to help put you in the best position possible. A borrowing power calculator allows you to compute how much you can borrow based on your income and debts. It allows you some insight into the difference between good and bad debt and how that debt affects your credit rating and how much you can borrow. There are also early payoff calculators that can show you how an extra $50 a month can affect your payoff date.

          If you think that buying a home is in your future, a mortgage calculator is an excellent tool to employ along the way. It can help you assess your current financial situation and set goals for the day you’re ready to take the plunge into home ownership.

Ways To Free Up Some of Your Borrowing Power

Do you know how much you can borrow? Most people don’t and don’t realize until too late that you take steps to increase borrowing power. Your borrowing power is an assessment of your credit worthiness. The good news is it’s based on simple math and easy to understand principles so fear not, there are ways to free up some of your borrowing power on your own.

          A quick online search will give lots of mortgage calculators that can help you determine your borrowing power. You input our income, debts, monthly bills, dependants and credit limit. That information is compared to give you an estimate as to how much you can borrow. Some may also estimate the type of mortgage you can qualify for based on the information.

This is your moment of truth, you can’t know where you’re going if you don’t know where you are, be honest with yourself and put all sources of income and debt. The less debt and more free cash flow you have available, the more attractive you are to lenders. 

          So now that you know where you stand, how do you improve your situation? Start paying off credit cards especially high interest department store cards. Lenders want to see that you can use credit responsibly, but may be reluctant to lend to those who can incur more debt. So check your credit limits. If you’re only using half of your limit, check into having your credit limit lowered. As you begin paying off debt, your debt-to-income ratio will fall. It’s your payments divided by total income and the lower the percentage the better.               

          When shopping for a mortgage the goal is to make your finances look as good as possible. If it shows that you’ve been a good steward to your money, bankers will want to lend to you.

Interest Rates are Still Low – Make Sure You Have a Current Rate

Though federal incentives to purchase a new home have run out, there are still a lot of great deals to be found in the housing market. Before you go shopping, remember that current interest rates are still low. Make sure you have a current rate by using these methods:
Shop around. A mortgage is just another product. Most of the time, we look for the best deal on groceries, why not do the same for your mortgage? Just like saving pennies on a pound of ground beef, you can save thousands of dollars over the course of the loan. You can begin at your financial institution and other local banks or shop online and compare standards and rates for institutions all over the country.
Fix your credit. This one may take a while but addressing your credit and debt can make you an ideal candidate for an excellent rate.
It can be as easy as ordering a free credit report and resolving issues. You also win by paying of consumer debt, especially if your debt-to-income ratio is close to 50%. Paying down a credit card will decrease your debt to income ratio, making you more attractive as a borrower, so does paying your bills on time. It seems like a no-brainer, but a lender will take a risk on someone who can’t pay a smaller bill on time.
If you already own a home, you can refinance to get a better interest rate. Refinancing to get a better rate could lower your mortgage payment significantly.
If you’re ready for home ownership, it may still be a good time to buy your dream home. Tax incentives may have expired, but good interest rates can still be had if you do your research and keep and eye on your credit.

Fixed Rate Mortgage VS ARM Rates – The Free Mortgage Calculator

I notice that most of the visitors to my website seem to use the mortgage calculator and leave. I know that it’s tough to search someones website and find exactly what you’re looking for but there is a wealth of information on my free mortgage website. I discuss each type of mortgage you can get with the bank in case your financial situation is different than someone else’s.

Fixed Rate Mortgage VS ARM Rate Mortgage

Most first time home buyers will get a fixed rate mortgage mostly because of the warning they will get before hand from their peers. It’s definitely a good choice for someone who doesn’t want to pay attention to their monthly payments or principal but it could also be a poor choice.

A fixed rate mortgage is one that is the exact same monthly mortgage payment each month no matter what the interest rates climb to. An ARM Rate, or adjustable rate mortgage, is an interest rates that changes as the federal rates go up and down. Your mortgage payment will change once per year after the fixed period is over. This could be wonderful or very scary because rates can only go so low when they’re already at 5-6%. They can increase up to 2% each year for a total of 6% maximum.

You can use my mortgage calculator to see how much your mortgage payment would increase if it went up 2% and I hope you’re sitting down during this calculation. However, the flip side is that it could go down 2% which was a great type of loan to have 15-20 years ago when interest rates were at 17-20%. Odds are they will be going down before up at that point.

Please comment, question or argue my blog observations. I’m only trying to help with my input so let me know if you think I have a good or bad idea!

Who Has a Mortgage Contest Idea?

I’m hoping to build a lot of traffic to my mortgage calculator website so that I can hold contests and give away money and prizes. The first contest I’m going to hold is “The Best Mortgage Contest Idea”. Winner will receive a $50 Visa gift card.

Each person will need to sign up and post their idea on the forum and discuss 2 other ideas during separate log ins to be entered to win. After that I will start holding the contests each month in order to build traffic and popularity to my free mortgage calculator. I’ll force the importance by giving away money and hopefully save people money on their mortgage at the same time.

Each person visiting my site will start to realize the importance of the different calculators and information. Your borrowing power is easy to figure out yourself without waiting a few days for your bank to respond. Essentially everyone knows how much they can afford per month so if your monthly payment is less than that the bank will probably approve your loan. However, if you can’t get a loan because of late payments, missed payments or faulted loans then it makes sense because I wouldn’t loan you my money either. Make sure you make all of your payments on time and pretend that you loaned yourself the money and want it back at the appropriate time.

Speaking my mind about mortgages – feel free to comment, discuss and argue. Loaning money is a business and we all know that when conducted right, business works for everyone. You can’t afford to pay for a home in cash so a bank loans you the money. Even though the bank makes money off of you, you make money on the investment of the home. If you’re not familiar with investing in a home, research it first or don’t do it.

Make sure to use my mortgage calculator for your mortgage loan, car loan, personal loan, home equity loan and even your student loans. Think of it more as an interest calculator to figure out a payment over a selected amount of time.

New Changes to Mortgage Calculator Blog

I will be making drastic changes to the look of my Free Mortgage Calculator blog in order to create the same look on my website. I am also creating a forum in order to attract new members to my website and discuss different mortgage ideas to save everyone money.

Everyone will be able to help each other use my mortgage calculator and even have a chance to win free prizes. All you have to do is sign up and get paid based on participation on my site. I will post questions daily and I want people to respond because the more a topic is discussed the more everyone learns from it.

At the end of the month I will go over the amount of responses from each person, the amount of time spent on my site and also the amount of page views by each visitor. Then I will award the 1st prize which is listed at the beginning of the month. Most likely it will be money in the beginning and depending on the popularity of my forum the prizes might get bigger and better.

You can use that money to pay down your mortgage! Use my free mortgage calculator to see how much it could save you over the years by adding some money each month. The calculators on my site will probably amaze you because you have no idea how much money can be saved paying down principal.