Mortgage Calculator

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Mortgage calculators are tools offered by lenders on their websites that allow you to do some preliminary research into how much a mortgage will cost you on a monthly basis and how much the final cost of a mortgage will be. Traditionally there are two types of mortgages. The first is the fixed rate mortgage and this is the kind of mortgage where you agree to pay the same interest rate for the life of the mortgage. The variable interest rate mortgage is a mortgage where you agree to pay the mortgage rate set by the bank for a predetermined period of time. Most variable interest rate mortgages get their payments re-figured annually.

A mortgage calculator is a computer program that allows you to input the amount of the mortgage you are planning on getting, the interest rate you expect to get, and the terms of the mortgage which are how many months you want to pay it back. The calculator takes this information and presents you with how much your monthly payment will be based on the information you gave it and it will also show you how much the total cost of the mortgage will be at the end of the life of the mortgage which is the combination of the principal of the mortgage and the total interest paid.

Mortgage calculators are estimates and should be used for budgeting purposes only. The mortgage calculator does not know the real interest rate you will get and there is no way for a mortgage calculator to determine what the interest rate would be on a variable rate mortgage from year to year. There are other costs that go into your mortgage such as insurance, closing costs, and escrow charges if you choose to use escrow to pay your taxes that may not be figured in to your mortgage calculator results. So while the mortgage calculator is a great tool to give you a basic idea of how much a mortgage will cost you it should be remembered that it is only an estimate and only your lender can give you real final numbers.