Mortgage calculators are a common-sense tool that many folks rely on when budgeting to own a new home. But, do they work?
And, can one rely on them to be accurate? The answer is …sort of… as the challenge is that they depend on the input of the user. If one knows the purchase price and down payment amount, it’s pretty simple to get an accurate principal and interest (P&I) payment once one plugs in an interest rate. After that, it gets much more complicated due to inputs for the homeowner’s insurance, property taxes, mortgage insurance (if applicable) and homeowner’s association dues (if applicable).
All are important considerations to get one’s true total monthly payment (which is the whole point of using a mortgage calculator in the first place). If putting 20% down, you’ll eliminate the need for mortgage insurance and can look up the property taxes on the local county assessor website (assuming one has a subject property) and can also estimate or get a quote for the homeowner’s insurance either online or by calling their insurance agent – then done! If not putting 20% down, better to call a mortgage professional and get some help as the mortgage insurance component can vary wildly depending on the loan program, final loan to value and credit scores.
