Q:

How do you use a mortgage payment calculator?

A:

Quick Answer

To compute payments, the Internet-based mortgage calculators at Bankrate, Discover and Bank of America require users to input data on interest rates, purchase prices, payment periods and down payments, according to the respective websites of these organizations. Additionally, the simplified calculator at Bankrate's site allows users to generate amortization schedules.

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Full Answer

The mortgage payment calculator at Discover's site allows users to factor in expenses such as property taxes and homeowners' insurance payments into their final computations, notes the organization's Web portal. An additional, more complex calculator at Bankrate's Web page offers prospective borrowers the tools to gauge the influence of mortgage prepayments on interest rates.

Apart from purchase prices, interest rates, the length of payment periods and down payments, credit scores also influence the size of monthly payments, reports Bank of America. These scores typically range from 300, the least favorable, to 850, the most desirable. Individuals with high credit scores may be able to get lower interest payments and more palatable down payment requirements. However, those with scores below a certain threshold, typically 620, may find it difficult to qualify for mortgages and other loans. In general, lenders prefer scores of 700 or higher.

The Fair Isaac Corporation develops the methods used to calculate credit scores, notes Bank of America. For this reason, these scores are alternatively referred to as FICO scores. Individuals can get their credit scores by contacting TransUnion, Equifax or Experian. These rating agencies may demand payment before issuing current credit scores.

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