# How to Use a Mortgage Calculator

If you’re in the market for a mortgage, you can use a mortgage calculator to help you determine how much you can afford to pay each month. Mortgage calculators will include taxes, insurance, and principal payments, and provide you with an estimate of how much each will cost each month. You should use the results only as a guide, not as a quote or pre-qualification. Information can change and should be verified before proceeding.

## Calculating monthly mortgage payment

In order to determine the monthly mortgage payment, most homebuyers use a formula. This formula consists of three inputs: the principal amount, the interest rate and the number of periods. By entering these values into the mortgage calculator, you can determine the monthly payment and the total cost of the loan. These figures only include the principle amount and interest, and do not include taxes or homeowner’s insurance. To get an accurate cost estimate, it is best to know the full cost of the mortgage loan.

After entering your basic information, you can move on to the amortization schedule tab. The amortization schedule shows how the monthly payments will be divided between principal and interest. The principal amount is the amount of money you borrowed, and it decreases as you make monthly payments. For example, if you put down 20% of the purchase price, your monthly mortgage payment will be higher than if you put down less than twenty percent. The calculator will automatically calculate this for you.

## Adding up monthly debt payments

Using a mortgage calculator can help you calculate your debt-to-income ratio. Your debt-to-income ratio is the difference between your total monthly debt payments and your gross monthly income. For example, if you earn $6,000 a month, you must have a debt-to-income ratio of 33 percent. A higher ratio means you are more likely to default on your mortgage and will have to face foreclosure. If your debt-to-income ratio is higher than 30%, you are considered “house poor,” and you may have to rethink your decision.

When using a mortgage calculator, you need to input the terms and rates of your loan. The calculator will then display an example of each payment, as well as its interest rate. The calculator will also show you how much money you will save over the course of the loan. The amortization schedule tab will break down monthly payments based on the terms you selected. If you’re looking to save money, you can use a shorter term.

## Adding up property taxes

Many homeowners don’t realize the importance of adding up property taxes when using a mortgage calculator. While property taxes can be a confusing number, lenders use a formula to figure them out. This formula divides the burden of property taxes by 12 months. The lender can then determine how much they will need to deduct. If the borrower overpays, they will be reimbursed, while if they underpay, they will have to pay more.

A homeowner’s property tax bill will vary based on the assessed value of the home. For a home that has an assessed value of $200,000, the tax bill will be $2,000 per year. This amount reflects the property’s current market value, which is the amount a knowledgeable buyer would pay, assuming no pressure on either party. In most cases, the property’s sales price is the fair market value.

## Adding up homeowner’s insurance

When calculating the cost of buying a home, homeowners insurance and property taxes are not easy to predict. But a mortgage calculator can help you estimate these expenses. Here’s how to do it. First, determine the cost of dwelling coverage. Dwelling coverage covers the cost of repairing or rebuilding a home if it is damaged by fire or theft. This amount includes labor and material costs, as well as liability coverage. To calculate the cost of homeowners insurance, divide the value of your home by $1,000. Then multiply that figure by $3.50 to get the cost of home insurance for a $400,000 home.

Next, enter your current rates for homeowners insurance and property taxes. Most homeowners insurance premiums cost about $1,445 a year. This number varies significantly from state to state. Property taxes are taxes that government entities levy on real estate. Mortgage calculators with taxes and insurance are a financial approximation of these costs. They include only a small portion of the total cost of homeowner’s insurance and other costs.