A home loan calculator is a tool that helps you better understand your home financing options whether you are purchasing a new home or refinancing your current one. This automated tool will crunch the numbers for you and the result will show your approximate monthly payments. And based on that you can decide whether you can afford the home you want.
When you use a home loan calculator Texas you need to enter some variables based on which the tool will offer you a result. Here are the variable –
- Home price
It is the first input that you have to give to an online mortgage calculator. You need to enter the purchase price of the home you want to purchase. The home price varies based on your requirements for a home. The kind of home you want to buy – whether small or big – and the location where you want to purchase it. You can search online to have a view of the price of the type of home you want to have, and then enter the amount. You can also enter the amount that you think you will offer.
- Down payment
A down payment is an amount that you have to pay when you buy something on credit. Generally, a 20% down payment is what most mortgage lenders want for a traditional loan with no private mortgage insurance (PMI). But there are exceptions too. For example, you can get approval for an FHA loan with as low as a 3.5% down payment, while with a VA loan, you have the option to get the loan with no down payment. Besides, some lenders have programs offering mortgages with down payments as low as 3% to 5%. In general, you should try to save 20% of your desired home price before applying for a home loan program. Being able to make a decent down payment improves your chances of qualifying for the best mortgage rates.
- Mortgage rate
A mortgage rate is the rate of interest that you have to pay over the life of the loan. You can use the mortgage rate a potential lender gave you when you went through the pre-approval process or spoke with a mortgage lender. In case, you don’t have an idea of what you would qualify for, you can put an estimated rate by using the current rate trends that you find in various online sites. But keep this in mind that your actual mortgage rate is based on a number of factors including your credit score and debt-to-income ratio.
- Loan term
You can choose a 30-year fixed-rate mortgage, 15-year fixed-rate mortgage or 5/1 ARM as your loan term. As their names suggest, the first two options are fixed-rate loans. It means your interest rate and monthly payments remain the same over the life of the loan. But with an ARM, the interest rate will change once a year. Based on the economic climate, the rate can increase or decrease. Be careful when choosing a loan term.
So, enter a home price, down payment, mortgage rate and loan term to know how much home you can qualify for.
Author Bio: Joan Gallardo, a Senior Loan Officer, with 20+ years of experience, here writes on 2 questions to ask the best mortgage lender in Houston when you are about to choose one of the first time home buyer programs in Houston.