A mortgage calculator can save the applicant time and money

Usually, home buyers search for a home they believe they can afford, such as a home that costs $150,000, without actually realizing what that means in terms of monthly payments. But it’s recommended for buyers to fully plan before reaching this stage.

A shrewd and conservative home buyer will first budget to see how much the family can pay each month on a home. To assist this process, there are hundreds of websites which offer mortgage calculators for prospective homeowners to compute such cash outflows, and applicants should utilize these services. Before inputting the pertinent data, the home buyer should answer the following questions:

-          “Do I want to pay this loan off in 30 years or sooner?” as 15-year options are also available

-          “How much have I saved up?” as this down payment amount will be deducted from the loan amount

-          “How much interest will I be charged?” – This will only be a guess at this stage, but it’s a rule of thumb that applicants with great credit histories and high deposits will receive the headline rate, while those with less impressive credentials should anticipate paying more. As well, it’s better to be conservative with assumptions.

The prospective homeowner should also factor in additional costs that renters do not incur, such as property taxes, and renovation and maintenance costs.  Homeowners should also factor in closing costs of up to $5,000.

Once house shoppers have estimated their costs, they can more accurately assess their true budget, take it to a real estate agent or mortgage broker, and begin the process of searching for a home within their financial reach.

By going through this simple process, prospective homeowners can save time by omitting properties outside their budget, as well as widening their choices by including homes they may have considered unaffordable in the past. If home buyers know and understand what they can afford, they are less likely to become victims of predatory lending.