5 top reasons to use free mortgage calculators

Calculators may sound so junior high, but free mortgage calculators are actually highly sophisticated online tools that can help you save big money on your home loan. Some free mortgage calculators are simple -- you just input your mortgage amount, length of loan and interest rate to get a general idea of your monthly payments. Other free mortgage calculators involve filling out complex, page-long inquiries.

No matter the ease or complexity, here are five steps to effectively using free mortgage calculators.

1. Use free mortgage calculators to decide on a length of loan. The key here is to use the free mortgage calculator calculate the rate that will allow you the lowest payments in the shortest time period. While many financial advisors say 15-year rather than the full 30-year mortgage will help you save as much as possible on interest payments and free you up financially in the future, that simply isn't an option with most people's monthly budgets. To get a quick idea of whether a shorter-term loan is even something you can consider, use free mortgage payoff calculators to do the math. Find these anywhere from Realtor websites to this one at the Financial Planning Association.

2. Use free mortgage calculators to decide whether to pay points. Before you apply for a loan, use a free mortgage calculator to figure out how much it would cost if you are paying just closing costs vs. closing costs plus one point. That way, you can determine your break-even point and what makes most sense for you, depending on how long you expect to keep the home. Commonly, if you plan on keeping the home for a longer period of time, it's wiser to pay the points; if you plan on keeping the home or the loan for a shorter time, it may pay to forgo the points and secure the higher interest rate. To figure out the hard data, go to free mortgage calculators like the one here.

3. Use free mortgage calculators to choose a variable or fixed rate.
We're not talking about zero interest or other mortgages gone wild. But variable rates, when used responsibly, can be a good option if you plan to pay off your loan in full sooner. If you're not up for the risk, then a fixed rate is probably for you. WalletPop offers information on how to make this decision, along with free mortgage calculators here.

4. Use free mortgage calculators to help you get ready for the loan application process.
A huge advantage to doing some initial math on these free mortgage tools is that you can determine your debt to income ratio, so you'll know what adjustments you need to make financially to secure the best interest rate and home loan. You may be surprised by how much debt you've taken on over time, and you don't want to get that ratio sprung on you when you're sitting in front of your mortgage officer. Use one of these free mortgage calculators to find out before you get there, so you can do something about it now.

5. Use free mortgage calculators to compare lenders.
When it comes to getting the right loan, it's not what you borrow, but who you borrow from. To find the best rates, go to your potential lender's website or to a site like bankrate.com, which offers comparisons via free mortgage calculators here.
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