Many people are not be able to afford a home in one payment and for those mortgage is a beneficial and adequate solution. It is, however, not always easy to determine how much money you can safely borrow without worrying whether you will be able to pay the necessary amount each month. If this is one of your concerns, you can use a mortgage calculator, a tool widely used across the world to help an individual calculate the total amount of their monthly mortgage expenses. As mortgage calculation may present some problems to an average citizen, a calculator designed especially for that may do the work instead of them, taking into account PMI (mortgage insurance), taxes, hazard insurance and extra payments; all in one place.
When an individual uses the calculator, it is essential that they understand the terms that they might encounter when trying to calculate their mortgage amount. The two types of insurance are very important as they take into consideration the lender as well as borrower of the finances. They are crucial as they make sure the lender and the borrower of the money are shielded from unexpected circumstances. While PMI benefits the lender of the money, homeowners insurance protects the borrower in case of minor or mayor damage to the object in question. PMI, however, only needs to be paid until loan balance drops below 78%, after that its payment is no longer required. HOA fees (Homeowners Association Fees) are also one of the features calculated by the mortgage calculator. They are paid by homeowners for various purposes such as maintenance of shared objects (e.g. elevators, hallways, etc.). The amount of such fees varies from building to building and even more from neighborhood to neighborhood.
Besides insurance and extra fees, one of the most crucial expenses with mortgages is the EIR or Effective Interest Rate. It is the amount of money paid to the lender of the money, usually a bank, for the act of lending you money. It varies from place to place and it is often the principal factor in the decision of where to borrow the mortgage money from. It is up to you to choose how often you will pay your interest, which also determines how fast you will pay of your debts. You can pay them monthly, semi-monthly, bi-weekly (every two weeks) or weekly. The more often you pay them, the more interest you will save and therefore spend less money. You also have the option of paying accelerated bi-weekly or accelerated weekly, which enables you to pay off your interest even faster. You can use the mortgage calculator with taxes and PMI to determine which of the options would be most suitable for you.