Mortgage Calculator - Article Summary
The main points covered in this article are:
Mortgage Audit Software (Mortgage Error Calculators)
- If you don't have a mortgage and are currently shopping around for a loan, a mortgage calculator can be a very useful tool.
- Based on your income and living expenses a mortgage calculator will tell you how much you can borrow.
- A mortgage calculator can save you thousands by letting you compare different loans, calculates the true cost of each and find the one that will be cheapest for you.
- There are two main types of mortgage calculators; those you use online over the Internet, and those you download and use on your home computer.
- If you already have a loan then mortgage audit software will help you manage your mortgage over the life of the loan.
- Mortgage audit software will help you check and audit your bank statements for errors, including interest calculations, excess fees and the overall accuracy of your loan.
- Mortgage audit software will help you track your repayments, calculate the impact on your repayments due to interest rate rises, and show you how to save thousands by paying off your loan sooner.
- Mortgage audit software summary reports will show you the true cost of your loan, broken down by interest charges, fees, deposits and withdrawals.
Mortgage Calculator - What Is It and What Can it Calculate?
If you are currently shopping around for a mortgage, you've probably found out by now that they come in all shapes and sizes. Interest rates that can be variable or fixed, loan terms ranging from a few years to 30 years (even 40 years in some cases), options of repaying monthly or bi-weekly and more fees and clauses than you can poke a stick at. To make matters worse, just to calculate the amount you can borrow, your repayment amounts and the total cost of the loan, you need to plug all these numbers into some pretty ugly financial formulas.
A mortgage calculator is designed to do all the complex calculations for you. By entering your income and living expenses, you can calculate the repayment amount you can afford each month, and from this you can calculate the total mortgage loan amount you can afford.
A mortgage calculator is also great for comparing different loans with different fees and interest rates, as it lets you see the true cost of each loan. You enter in all the relevant information and it calculates expected repayment amounts, amortization schedules and the total cost to you.
For example, assume you are looking for a mortgage for 150,000 over 30 years. Bank A is offering you an interest rate or 6.9% with no upfront fees, and bank B is offering you and interest rate of 6.7% with 750 of establishment fees. Which is the cheaper option over the life of the mortgage?
Bank A (at 6.9%) will end up charging you 205,644 in interest payments over the 30 years, and bank B (at 6.7%) will charge you 198,451 in interest payments plus the 750 upfront fee (a total charge of 199,201). Despite bank A being over 6,400 more expensive than bank B (205,644 compared to 199,201), many people still go with bank A to avoid the upfront fees.
It's worth remembering that when dealing with mortgages, the smallest change in interest rates can make a big difference to the total amount you end up paying. A mortgage calculator can help you calculate the true cost of a mortgage before you sign up with a lender.
If you are currently looking for a mortgage, want to know how much you can borrow, and which mortgage is the best deal for you, a mortgage calculator can save you thousands by helping you chose the right mortgage.
Mortgage Calculator - Online or Software Download
There are two main types of mortgage calculators, the ones that you use online over the Internet, and those you download and run on your own computer.
Most banks and mortgage lender websites provide some sort of free mortgage calculator to help you calculate how much you can borrow. Some provide additional calculators that produce amortization schedules, monthly and bi-weekly repayments schedules, prepayment calculators and more.
A word of caution with online mortgage calculators. The information you are providing may be recorded and used for marketing purposes, so be careful how much personal information you enter. If you have to type in an email address, phone number or street address just to use the calculator, then you may find yourself on the receiving end of a sales pitch. Try to find a mortgage calculator that allows you to enter financial details (eg how much you want to borrow, interest rates, etc) without having to enter any personal details (eg name, address, email, phone numbers, etc).
The other limitation of online mortgage calculators is that they don't let you save your calculations. Therefore, if you are trying to compare multiple mortgage loans over a period of time, it can become a little cumbersome having to re-enter the same information over and over.
With downloadable mortgage calculators, the main concern is the risk of being infected with a virus or spyware. As with any download, it is best to source it from a reliable web site and to virus check it before using it.
Apart from the above warnings, the choice of using an online mortgage calculator and/or downloadable mortgage calculator is a personal one. You can get started with online calculators straight away, whilst downloadable calculators take a little more effort to set up. However, if you can see yourself using one often over the coming weeks, then the additional set up effort will pay-off.
Mortgage Calculator - What It Isn't and What It Can't Calculate
A mortgage calculator does have its limits. Once you have signed up for the mortgage of your choice, and start the long journey of repaying it, then a mortgage calculator becomes less useful.
For example, the mortgage calculator amortization tables (listing all your loan repayment amounts, broken into interest and principal amounts) are useful when you start out, but soon become obsolete if interest rates change, or you start making additional repayments.
This is because a mortgage calculator is designed to estimate future values, providing you with information so that you can make decisions (eg choosing the right mortgage). Unfortunately, it's not so good at helping you track the repayments on your own mortgage, or providing you with summary information as to how much your loan is actually costing you. Most importantly, it won't provide you with tools to check your mortgage statements for bank errors, or protect the thousands you pay in interest each year from lender mistakes.
Therefore, once you start the repayments on your loan you need a tool that will help you track your mortgage. You don't want to be working with estimates, you want to be dealing with the actual figures.
Mortgage Calculator vs Mortgage Audit Software
If you have a mortgage, or are about to sign up for one, then it is time to switch from a mortgage calculator to mortgage audit software
(also known as a mortgage error calculator
). Mortgage audit software helps you check your statements for errors and allows you to manage your mortgage over the life of the loan. You simply type in (or import) your mortgage loan information, statements, transactions and interest rate changes, and the software does the rest.
Mortgage audit software is designed to help you:
- Track your mortgage repayments over the life of your loan.
- Check your mortgage statements for bank errors and lender mistakes.
- Calculate your expected refunds from any bank errors.
- Check you are receiving the full benefit from your offset account.
- Calculate how much your mortgage is costing you each year, broken down by interest payments, fees, deposits and withdrawals.
- Compare mortgage costs from year to year and statement to statement.
- Gain insight into your bank's calculations, by providing you with the daily breakdown of your mortgage interest charges and calculations.
- Calculate and plan for changes to your repayment amounts due to interest rate rises.
- Repay your mortgage earlier by providing you with up to date estimates of the amount to increase your repayments by, to meet you early repayment goals.
- Guard against bank errors and protect the thousands you pay in interest over the life of your loan.
In summary, mortgage audit software can help you avoid expensive mistakes. An undetected error will compound over the life of your mortgage and could end up costing you thousands.
Mortgage Calculator and Mortgage Audit Software - What Next?
If you are currently searching around for a mortgage, then a mortgage calculator is a good option to help you compare mortgages. If you already have a mortgage, then you should download a mortgage audit software
package, check your statements for lender mistakes, and use the software to help stay in control of your loans.
Useful Tools for Auditing Your Mortgage
Mortgage Audit Software
- Home Loan Interest Manager Pro
is a complete home loan and mortgage manager that allows you to track your repayments and audit your mortgage statements. Download the free trial now and check if you have been overcharged (available for Windows, Linux and Mac OS X).
About Home Money Manager
Home Money Manager is a company that specializes in the production of easy to use personal finance software. Are you personal finances under control? Find out how what's really going on with you mortgage, home loan, credit cards and personal budget at http://www.homemoneymanager.com.au.
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