A mortgage calculator is also known as an amortization schedule calculator that assists borrowers to estimate monthly home loan payments, according to Wells Fargo. The calculator is designed for determining how much of the repayment goes toward the principal of the loan and how much goes toward the interest.
There are several advantages to using a mortgage calculator, according to Bankrate. The calculator can help determine how much more money should be added to a monthly payment if the borrower wants to pay off a mortgage early and reduce the amount of the loan that goes to interest instead of principal.
Not all adjustable-rate mortgages (ARMs) are beneficial for everyone, as noted by Bankrate. Borrowers should use a calculator to see what the interest would be for 30 years by entering the ARM. They should then compare the ARM payments with a conventional 30-year fixed mortgage.
A mortgage rate calculator can help analyze when a borrower will have 20 percent equity in the home, thereby no longer needing private mortgage insurance. Using the calculator, borrowers should enter the initial amount of the mortgage and closing date. The calculator will recalculate the amortization table and multiply the original mortgage by 0.8. The calculator will show when the borrower has reached 20 percent equity in the home.