Before you start speaking directly with your loan officer about which loan options might suit you best, for anyone interested in doing so, our mortgage calculators make it easy to explore options and get a preliminary sense of the numbers you’ll be dealing with. Our mortgage calculators are a powerful resource that will give you a ballpark range for monthly payments while also providing information to help you make important financial decisions about your mortgage.
Rent vs Buy Calculator
If you are considering making the switch from renting to purchasing, the Rent vs. Buy Calculator can help compare all the numbers. Some key variables this calculator factors into the equation include: the price of the home, the current rent payments vs proposed mortgage payments, the annual cost of the new home, and applicable insurance and tax expenses. In some situations, the tax benefits and the appreciation of the proposed home could, over time, prove to be financially beneficial when purchasing a home, so this might be worth looking into if you are on the fence about the benefits of homeownership.
Before you start your search for a new home, you should have a general idea of how much you can afford to pay each month. You can calculate this number by entering your monthly household income, any monthly debts, and other regular monthly payments into the Affordability Calculator. You may also need to think about down payment funds, the interest rate, the potential length of the loan you would be looking for, and tax and insurance expenses.
At this point you should also calculate your front and back ratios, which compare your housing expenses with your additional spending habits for daily living. Your “front ratio” is the percentage comparing your gross monthly income to your housing costs, whereas your “back ratio” is the percentage of your gross monthly income used for both housing payments and other regular monthly expenses. Understanding your affordability before embarking on your home search can save you lots of time when narrowing down homes that could be right for you.
When you’re at the home shopping stage of your mortgage process you should not only be weighing the pros and cons of the home itself, but also considering the monthly payments each option would require. Determining what your monthly payment will be depends on a few central factors, including: how much you will be borrowing, the interest rate, and the term of your loan. Taxes, various insurance costs, and of course the total value of your home will come into play as well, so expect those to also be a part of the equation. If you want to start taking a look at the payments associated with different scenarios, use the Payment Calculator for help.
Remember the actual rates, payments and costs could be higher or lower than what is reflected by the calculators. Always request an official loan estimate before choosing a final program. While these calculators can help educate you about the costs and expenses associated with home financing, you should still utilize the expertise of a licensed loan officer. So, collect all your financing information and start playing around with calculators. Even if the numbers seem confusing to you at first, you will at least be able to pick up on some points to ask your loan officer about later.