Things You Should Never Do With A Mortgage Calculator
Forgetting The “Extras” That Go Into A Mortgage
It might seem like all a person has to do is plug in a few numbers and boom they have a mortgage rate. While one might try to use a mortgage calculator that way, it is the completely wrong thing to do if you want a legitimate answer as to how much your mortgage will actually cost. The information you seek has an answer more complex than just the down payment, interest rate, and price of the house.
Those three things are all important factors in this calculation, but to stop there is to do a disservice to yourself. Instead, you ought to also plug in factors that a Loans.com.au Mortgage Calculator may miss. Consider the rule of your property taxes for example. Some mortgage calculators simply ignore this altogether. That leaves users with an imperfect picture of what their mortgage payment will really look like.
Miscalculating Interest Rates
Sometimes people who use a mortgage calculator assume that they can get the best interest rate available on the market. They believe that they are credit-worthy, or perhaps they have no clue at all what their credit score is. In either scenario, they may be allowing the mortgage calculator to delude them once again.
When using a mortgage calculator, it is better to assume your interest rate will be higher than what it may in fact turn out to be. Being conservative in your estimation gives you room to be wrong. That margin of error is what you need unless you want to have the sticker shock experience of paying way more monthly on your mortgage than what you ever expected to pay.
When purchasing a house, you are most likely going to be responsible for paying the closing costs. In a lot of cases these can be rolled into your mortgage payment, but of course that is going to make that payment a little higher than what you may have been anticipating.
If you can manage to get a deal on closing costs, you should by all means try to take it. However, many people are simply unwilling to budge on that particular part of the negotiations. You might as well figure it in to your calculations for how much you will have to pay for the monthly mortgage payment.
Avoid these traps and you can gain a lot of utility out of a mortgage calculator. Fall for these traps, and you will end up disappointed.