Mortgage Calculator With PMI, Interest, Tax, and Uses of It

1. Mortgage Calculator With PMI, Interest, Tax, and Uses of It If you are buying a home for the first time, there is a huge chance that you may be buying it on a mortgage. You may be starting your career, just planning to move to a new city for work, or a newly married couple planning to have kids. In any case, you need to manage your expenses and see if the property you are planning to buy is within your budget or not. All the states have different rates of interest, according to their local norms and needs. This is where a mortgage calculator can come in handy. Additionally, there are also a lot of expenses such as insurance, brokerages, utility bills, etc. which you must make yourself aware of. Let us see in detail how to calculate EMIs and what these additional costs are. What is a Mortgage? Source: facebook.com

2. When an individual/entity borrows money from a lender against an immovable asset as a security, it is call a mortgage. The lender keeps the asset with them until the borrow money is a return. Let us see some terms related to the mortgage: ● The initial amount borrowed is known as the Principal amount. ● Most of the time, the lender charges some extra money while asking for repayment. This extra money is call Interest. It is calculate on the Principal. ● The time period within which the principal amount is to be return is known as the Term of the loan. ● The total money to be paid back, including the interest, is known as the Amount. ● Down Payment is the part of the purchase amount that you have to pay immediately, apart from the Instalments. Mortgages are generally provided by a Bank or a Non-Banking Financial Corporation (NBFC) under a Home-loan scheme if you are taking a home loan. When you approach the bank/NBFC to take a loan, there will be several steps following which you will get your loan approved. Here are these steps: 1. Submit your application: You will have to submit an application form giving your personal details. You will also have to submit your documents for verification, along with your financial background details. 2. Home Inspection: There will be an inspection of the property for which you want to take a loan. This is to make sure that there are no disputes or any other possible issues regarding the property you wish to purchase. 3. Purchase Owner’s Insurance: This is to ensure the safety of your property against any accident or some natural calamities. Generally, it is mandatory to have insurance to get your loan approval. 4. Locking in your rate: It is important to negotiate and finalize the rate of interest before finalizing the deal. This reduces the chance of any discrepancy at the later stages.

3. After your loan is approved, make sure that you read all the concerned documents with a fine eye to be aware of every aspect of the deal. However, there is a catch here. Before finalizing the deal and locking the rate of interest, you need to finalize your budget. The monthly payment which you can afford and the time period for which you are willing to repay the loan. How to use Mortgage Calculator ? Source: financehead.com The calculations related to mortgages are based on the formula of compound interest. There are a lot of free tools available on the web to help you to calculate numbers related to mortgages. You just have to go online and search for a mortgage calculator. If you want to search for a calculator based on your own geographic location, you can search for a mortgage calculator [your local area’s name].

4. For example, if you are from Arizona, you can search “mortgage calculator az”, or if you are from Utah, you can search for “mortgage calculator Utah”. Similar searches like “mortgage calculator sc” or “mortgage calculator mn” can be made. If you want to search for calculators based on certain time intervals for which you want to pay your instalments, you can search for terms like “biweekly mortgage calculator”. However, for the mathematically inclined people who like to do calculations on their own, here is the formula: [P x R x (1+R)^N]/[(1+R)^N-1] Here, P = principal, R = rate of interest, N = number of instalments The number of instalments can be calculate by multiplying the number of years of the loan by 12 if you want to pay monthly, or by 24 if you want to pay biweekly. Given any 3 of these quantities, you can find the fourth one easily by solving the equation.

5. Factors A?ecting your Equated Monthly Instalments (EMI) Source: countrywide.co.uk It is important to note that you cannot make the decision for your loan tenure or the EMI independently. There are some factors that affect the amount of EMI you are eligible for. Let us take a look at these factors: ● Credit Score: based on the history of how frequently you use your bank account and for what type of transactions. It is a measure of how credible you are for the lender to lend you their money. ● Debt to Income ratio: It is the ratio calculated by dividing all your monthly expenses related to your debt by your monthly gross income. The higher the ratio is, the lower are the odds for you to get a loan. Credit score is the score that is calculated by your bank,

6. ● Other Factors: There are other factors such as local rates, current market trends, etc. which influence your lender to decide how much EMI he can allow you to pay. All these factors, combined together, decide the range for your EMI. It always recommends talking to at least 3-4 brokers to get the best of the available benefits. Factors A?ecting the Rate of Interest for Your Mortgage Source: goerie.com

7. 1) Property Type: The rate of interest differs from small properties like a flat to a large villa. 2) Property Use: Commercial properties have higher interest rates than those for domestic use. 3) Credit Scores: Credit scores affect your rate of interest, just the EMI. A higher credit score means lower rates of interest. 4) Down Payment: payment, you can reduce your rate of interest significantly. This is because when you pay more as a down payment, it means that your loan amount reduces and hence the interest. If you pay a large portion of your loan amount as a down 5) Loan Amount: interest significantly. If the loan amount is higher, then it can affect your rate of 6) Loan Type: Home loans usually have a lower rate of interest than other types of loans, like a car loan or a personal loan. 8) Fixed Period/Loan Maturity: Loans having a longer time period, generally cost you higher rates of interest. 13) Collateral: If you provide secure and liquid collateral, then you can request a lower rate of interest. Collateral is call liquid collateral when it is easy to sell it to recover money. Additional Expenses apart from EMI There are some additional expenses along with your EMI which you should see in your mortgage calculator which you need to consider before making the purchase. Let us look at these expenses one by one: ● Insurance: As mentioned earlier, generally it is mandatory for you to buy an Owner’s Insurance before you can buy a house. This insurance claims to cover the damages caused to the house by any accident, or some selected

8. natural disasters. Just like the insured property, these insurances can be heavy on your pockets too. ● Electricity: In today’s electronic world, there is probably no way that you can live without electricity. These electricity bills can become a significant part of your monthly budget if you have a big family or a big house. ● Other Utilities: Other utility bills like water bills, house taxes, and the maintenance bill of your society also need to be considered before making a decision. The Bottom Line Before approaching a lender to take a mortgage, you have to first decide your budget. This means that you have to see details like the total cost of the house, your monthly budget, and the time period within which you are willing to pay the loan. After this, other additional costs like Insurance, Electricity bills, water bills, and other utility bills also need to be considered. Doing these prerequisites are necessary because you need proper planning once you approach your lender or dealer. You need to be aware of all the things that you want. Also, the things which you want to avoid. Look for the right property, in a better location, with an adaptable society. All these things ultimately contribute to the level of ease for getting your loan approve without hassles. It is important to note that geographic area also affects your mortgage. Lenders generally prefer giving their money for the properties that are situate inaccessible, civilize, and develop areas. Properties near a hill or a water body may face some issues. As they are more prone to natural disasters like landslides or storms. Now that you have learned about the factors that affect the term of your loan, the rate of interest, the use of a mortgage calculator, and your Equated Monthly Instalment(EMI), you are well-informed to avail a loan for your dream house. For more finance-related concepts you can have a look at the FinanceShed, and stay tuned for more updates.

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