Q:

How do you use a home loan payment calculator?

A:

Quick Answer

Inputting the term of the loan, the applicable interest rate and the loan amount provides a simple look at a home loan payment, as stated by Bankrate. However, more sophisticated calculators allow the user to include such costs as property taxes, private mortgage insurance premiums and homeowner's insurance premiums.

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Full Answer

Mortgage payment calculators assume a fixed interest rate, notes Bankrate. If the rate is variable, the payments cannot be calculated in advance.

Maximum loan amount calculators use current income and debt obligations for the borrower to determine how much he can afford when purchasing a home, according to Bankrate. The ratios that these calculators use do not necessarily apply to each borrower, and borrowers do not always qualify for the maximum that the calculator indicates.

Refinance savings calculators indicate the amount that borrowers might save if they refinanced their home loan, reports Bankrate. Some of the inputs include current monthly payment, pay-off balance on the note, current interest rate and the remaining number of payments, as well as refinancing closing costs and the new loan's term and interest rate. The output from this calculator shows the borrower whether or not he would save money by refinancing as well as the monthly savings, but it doesn't incorporate the total expense of the interest.

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