Mortgage Payment Calculator

Present market condition is pretty unstable and this keeps on fluctuating causing people with limited income or property to suffer financial losses. We all have families to support and our future to be made secure with the financial assets (fixed or liquid) or monetary saving that we have in our bank accounts. Along with that, if we can have certain amount of investments in different forms, then it does make us feel financially secure and gives a sense of security.

But one large economic crisis in the market can render all the savings or assets useless and even the most secure person can be plunged into crises. If you are somewhat perplexed by hearing this and believe that with your great investing acumen no such thing can happen to you, then tax your mind and try to remember the Great Depression of 1920-1921 which was the sharp recession in the United States of America along with other countries that ended up severely damaging the economy around the world. This period began around 14 months after the end of World War 1 and lasted till July 1921. During this phase not only banks and other financial institutions collapsed, in turn the people especially the investors suffered major losses. Even the common people lost a lot on their investments and savings and this bleak economic situation has dire consequences in terms of human property and life. The deflation was not only humongous, it also caused the decline in the value of real product. Besides the big investors, the common people suffered massively.

After the 1920s’ financial crisis, the economy steadily moved up and the world began to get connected into one global market via the Globalization which helped all the nations around the world to reap the benefits of one nation’s financial gains directly or indirectly. But then, unfortunately, the world market hit another hurdle in form of the financial crisis of 2007 and 2008 which is commonly known as Global Financial Crisis/the 2008 financial crisis which as a massive economic slump of the 1920's. Again this time, especially due to globalization, from big traders to common investors suffered lump sum economic losses as their investments fell in value and even the saving could not save them. It was caused due to the crisis in subprime mortgage in 2007 in the United States’ market and turned into the banking crisis at the international level which was then followed by global economic downturn which was widely labelled as the Great Recession. After this, even the European nations that used the Euro suffered debt crisis of the banking system.

These economic crises and downturns have been part of the financial history and it is highly probable that these will happen in the future as well. You will have to remain active and aware in terms of maintaining your financial status by making your economic investments or savings secure and strong. The fact that you need to keep in mind is that even the strongest and smartest of investors can suffer losses when the economy goes down the drain, so a normal person like you and me will, in most cases, going to lose our savings or suffer losses on the investments. After all, not all of us are Bill Gates or Warren Buffet who know how to smartly invest and utilize the money and prevent ourselves from suffering losses. So it is always advised that when it comes to investment and economy, we should not be frivolous and try to stay safe from suffering losses by investing smartly and saving whenever we can so that when the economy does take a turn for the worse, we can maintain our living standard and not lose our assets, etc. This can become even easier if you have some fixed assets to your name and credit which can be used to get load against them.

What is Mortgage?

The banking and financial system is only a little younger than the human civilisation because as soon as the humans developed and began to live a civilised life, then understood the need of bartering or trading and later the concept of “money” also developed. Also, the concept of mortgage came into existence that helped the people to get financial support against their assets or other valuable things. So in simple terms on the basis of present economic situation, a mortgage is termed as a debt instrument that is secured by agreeing to the collateral or “depositing” the real estate property that a person may be the possession of so that the person to whom the property is being offered for a specified amount of time may provide financial support to the borrower who then agreed to pay back the predetermined amount within the specified time. Mortgages aid the individuals as well as the large businesses to invest in big real estate properties without suffering the burden of paying the entire value of the property upfront. Then the loan as to be paid by the borrower over several months or years and the principal as to be paid along with the interest till the payment is complete. This helps, especially a common person, to withstand the economic hardship and sail through tough times unscathed.

So if you have to pay the huge medical bills when a serious health issue strikes you or your family, pay for the college tuition of your child or maybe go on a vacation but do not have sufficient funds with you during that specified time but have a great property in your name, then the right way of raising finances for any of the above specified issues or even many more, you can mortgage your asset and enjoy the financial perks. You will have to pay back the amount over a period of time that suits you best with nominal interest without getting buried under the financial burden. Do remember, if you stop paying then the banks or financial institutions can and have the right to foreclose on your property. If you do not know how to initiate the mortgage payment or how to calculate the mortgage, then you can use the mortgage calculator that is easily available online and can help you in a number of ways to understand how much you need to pay against your mortgage. These calculators perform even the trickiest of calculations without any hitch and in a matter of minutes, you just need to fill in the basic details.

Different Types of Mortgage

There can be a number of mortgages and different ways of calculating the payment of it using the mortgage calculator. For instance, under the residential mortgage, a person buying the home can pledges their home to a bank then against which the bank will give the financial support but if the borrower fails to pay back the specified mortgage in a fixed time or completely stops the payment, then the bank can lay claim on the house by even evicting the tenants and sell the home to use the income to recover the loss. The mortgages are of different types –
  • Fixed Rate Mortgage
  • Adjustable Rate Mortgage (ARM)
  • Interest Only Mortgage
  • Payment Option ARM's

Under the Fixed Rate Mortgage, the borrower has to pay the same interest rate till the loan is completely paid back. This mortgage has the same principal and interest, that have to pay each month, and they never change through the entire process. Most of these mortgages are 15 to 30 years long. Though the borrower can benefit from the dropping market rate by securing the lower interest rate by refinancing their mortgage but if the market interest rate increases then the payment will not change at all. The Fixed rate mortgage is a traditional mortgage and is the most common one.

The Adjustable Rate Mortgage or ARM is a mortgage in which the interest rate remains fixed for the initial term but later it fluctuates with the changing market interest rates. Therefore, the early interest rate often is below the market rate which gives the impression of the mortgage being much more affordable than it truly is. Although later if the interest rates tend to increase then the borrower may feel burdened to pay the higher interest. But in case the rates decrease, then ARM can become less expensive and affordable; making the monthly payment unpredictable after the initial term gets over.

The Interest-Only Mortgages and Payment-Option ARM's are less common which are usually used by experienced and prudent borrowers as with lack of information regarding these mortgages, inexperienced people often lose money and end up in further financial troubles.

So when you are thinking about getting a mortgage, it is advised that one should opt for a mortgage calculator as it will give you a fair idea of the amount of interest rate that you will be paying in the future along with the total cost of interest that will be paid back over the course of the entire mortgage.

How to Calculate Mortgage using the Mortgage Calculator?

When you are going through financial instability and are in a dire need of some money but do not have anyone to turn to, then you can always get a good amount of mortgage against your home or another such fixed asset. You just have to go to a bank or a certified lender who will then go through your credentials and assess the value of your property against which you wish to get the mortgage; is a pretty simple task and you can also benefit from the fluctuating market rate of interest, especially if it goes down. But before you do visit the financial institution to get the mortgage, you should check the interest rate yourself to be mentally prepared and lessen the chance of suffering a loss in terms of high rate of interest. You can choose the type of mortgage you want to apply for and see how much you will have to pay and the duration for which you will be paying back your mortgage so that you can adjust other finances accordingly. 

You can take the assistance of the mortgage calculators that are easily online. All you have to do go to any of the one mortgage calculators, where you will see a form that will ask for the basic details. So you just have to put in the Home Value, Down Payment, Loan Amount, the Interest Rate, the time or date from which the loan is going to start, Property Tax, the Private Mortgage Insurance or PMI, Home Insurance, along with the Monthly Home Owners Association deposit. When you have entered this vital and basic information regarding your property, you just have to hit the “calculate” button and you will get all the required details regarding your mortgage.

For instance, if the value of your home is $300,000 and you give the down payment of $60000, the Loan amount is $240,000 and the interest rate is 5%. You want the loan term to be 30 years and the loan is supposed to start in June 2018. The property tax is $2,400/year, PMI is 0.5%, and Home Insurance is $1000/year while Monthly HOA is 0. So the Mortgage Payment Calculator will show the following results –
  • You will be required to pay $1,571.71 as monthly payment and there will be no PMI.
  • With $60,000 as the down payment amount, the down payment percentage will be 20%.
  • You will be required to pay the entire loan by May 2048
  • Total amount of interest to be paid will be $223,813.88
  • You will have to pay $200 as the monthly tax and $72,000 as the total tax.
  • You monthly home insurance will be $83.33 while monthly home insurance will be $30,000 and total home insurance will stand at $18,860.46.
  • The annual payment amount is going to be $565,813.88
  • Total number of Payments to clear the loan will be 360
  • You can also see the summary of Monthly and Bi-Weekly Payment
  • The monthly payment of loan will be $1,571.71 while bi-weekly payment will be $785.85
  • You can also see check the amount of interest savings which will be $41,227.90.

Summary

So if you have financial issues and want to make good use of your property, then go ahead and use it to get a good loan, but first, use any of the mortgage calculators that are available online and make the process simple and easy for you.

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