It’s no secret - buying a home is a huge investment. Every potential homeowner should consider all possible expenses, and think about them deeply. Purchasing a home is an exciting milestone in life, but before they commit, buyers must assess their particular financial situation and how it will help or hinder the hunt for their dream home. 

Luckily, there are plenty of user-friendly and accessible calculators online that allow buyers to calculate mortgage pre-approval! Using a mortgage calculator is a fantastic way to gain a better understanding of the possible financial impact buying a house could have on the buyer’s finances. They are invaluable tools that quickly aid potential owners to estimate projected mortgage costs accurately. Plus, they provide a long-term vision of what a buyer’s costs could be - mortgage calculators project as far as 15 to 25 years into the future! 

We’re here to explain all the details buyers will need to have handy and how to use a mortgage calculator to calculate a mortgage. Don’t worry about how to calculate a mortgage by hand - these websites do all the heavy lifting for buyers, as long as you provide the details, including the principles of the mortgage, projected interest rates and property taxes, and homeowners insurance. 

The Principal of the Mortgage

The first data point you’ll need to supply the mortgage calculator is the principal amount. Principal amount refers to the initial loan amount a buyer borrows from the lender. To calculate this number, a buyer must consider the purchase price of the property and the down payment they intend to make. By deducting the down payment from the total purchase price, buyers arrive at the principle. Find out more about principal payments here.

Buyers can explore all their options and push the boundaries of what they think is possible with this tool! That’s because online calculators allow potential owners to adjust amounts easily, exploring all possible scenarios, which helps in evaluating different loan options and their corresponding monthly payments. By calculating payments on a mortgage, any potential buyer is able to understand exactly what they can afford!

The Lender’s Interest Rate

This is another crucial number to calculate payments on a mortgage and calculate mortgage affordability overall. Interest rates play a significant role in determining mortgage costs over time, although unlike mortgage calculators they can’t be projected 15 to 25 into the future. These rates represent the percentage of the loan amount charged by the lender for borrowing the funds. 

Remember, interest rates vary depending on market conditions, credit score, and other factors. Utilizing an online calculator helps buyers visualize the impact of a variety of different interest rates on monthly payments and mortgage costs. When in doubt, default to the market’s standard interest rate to calculate a mortgage accurately.

Property taxes vary significantly depending on location. To estimate a certain area or home’s property tax, mortgage calculators provide an option to input the annual tax amount. 

As an exact calculation isn’t available until after the home inspection and correct reports are sent to the insurance company, it’s acceptable to use the previous year's numbers as a starting point. While property taxes fluctuate over time, using the last year's estimate gives a reasonable approximation, as they tend to remain more or less stable year-to-year. 

Homeowners Insurance

Homeowners insurance gives buyers something invaluable: peace of mind! Insurance makes investment and financial security possible for buyers. As such, any online mortgage calculator will ask users to include an estimate for homeowners insurance. 

This kind of insurance typically protects against damage or loss caused by various factors, such as fire, theft, or natural disasters. The exact cost of homeowners insurance can vary based on factors like the property's value, location, and the level of coverage you choose. To calculate an estimate, simply find a homeowners insurance calculator like this one and input the details specific to your situation. Another option is getting in touch with a local home insurance office to ask them to make an estimate. 

If you choose to use an online calculator, make sure that the estimates you use in this calculation are as accurate and honest as possible to get trustworthy results!

Online resources save buyers so much time! When used correctly, mortgage payment calculators are incredibly accurate and fast. By understanding the basic principles and costs of interest rates, property taxes, and homeowners insurance, you'll be well-equipped to make informed decisions regarding your home’s purchase and its projected mortgage. 

Remember: online calculators allow buyers to explore different scenarios and consider the impact of a variety of factors on monthly expenses. Don’t be afraid to explore the possibilities with different numbers and see where they get you!

If you’re still on the hunt for your perfect property, please take a look at our gorgeous featured listings in the Space Coast area here. Looking for support calculating the projected monthly mortgage of your dream home? Any and all questions about how monthly mortgage payment is calculated can be directed to our team of experts here.