How Different Mortgage Rates and Terms Affect your Payment

By: Wayne Hemrick

A comprehensive mortgage calculator is a handy device to access when you have questions about your current or new home mortgage. There are several factors that can increase or decrease your monthly payment amount. The total loan amount, the interest rate, and the term of the loan all play a part in determining the monthly payment. Changing any of these elements changes the monthly amount, so by utilizing a free home mortgage calculator you can see in an instant what your new payment would be, and whether it would be to your benefit to make the changes or not.

You do not want to be financially stretched beyond what you can comfortably handle when it comes to loan repayment. It is a good idea to calculate mortgage payments before you sign any papers so you know how large a mortgage you can assume. Online calculators will help you determine that figure.

If you are considering a home purchase and know what the total loan amount is, you can also use a home graphical mortgage calculator to discover how much you will need to earn to be able to make your house payment each month. Knowing the answer to this and the previous question can help you narrow your focus to homes that are in a price range that you can afford, so you can make the loan payments easily.

The length of the term will affect how much you pay each month as well. A longer term will result in a smaller monthly payment, while a shorter term will come with a larger payment. Fixed-rate mortgages usually come with 30- year and 15-year terms, although other term lengths are available. Comparing a mortgage loan with different terms can show you how much you can save in interest costs over the life of the loan, and a mortgage calculator can give you this information.

The interest rate will also play a part in determining how much your payment each month will be. Even fractional changes in the interest rate can make big changes in your payment, so you will want to carefully consider all offers your mortgage broker makes by putting the numbers into a home mortgage calculator to see how you can best save money on interest charges. One way to bring the interest rate down is to pay more money upfront on the loan. In this way you can purchase discount points, and these reduce the interest rate and therefore the amount you will end up paying monthly on the home loan. It's a big decision to determine if discount points will benefit you or not, and this is when an online calculator can be a huge help in understanding how it affects your payment.

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