Sep 12, 2018 / Money Tips

How a Loan Calculator Can Help You Find the Perfect Home

In the search for the perfect home, everyone has their list of must-haves. From location and home size to neighborhood and number of bedrooms, the perfect home means something different to every buyer. But while one person’s must-haves are another person’s indifference, buying the perfect home always includes finding the perfect sticker price. And that means being able to break down a large, scary purchase price into a much more manageable monthly payment. Here are a few tips for using a loan calculator to help you find your perfect home.

Calculate with Accuracy

You can find several simple loan calculators online, but maybe the most convenient among them are those found on your lender’s website. Like all loan calculators, these will allow you to play around with inputting different home prices and loan terms to find your hypothetical monthly payment. But they should also give you a list of lowest annual percentage rates available to most qualified buyers for different loans. That way, you can estimate your monthly payment with as much precision as possible.

Find a Payment

The simple home loan calculator involves three inputs: 1) an amount, 2) an interest rate, and 3) a loan term. If the sticker price on your perfect home is $400,000 and you want to pay off your mortgage in 30 years, simply enter those numbers in the calculator along with your estimated interest rate. If you plan to make a down payment, don’t forget to subtract that amount from the total home price before making your calculation. So, in the example above, if you plan to pay 20% down, enter $320,000 as the amount instead. If you’ve entered everything correctly, you should have a good idea of your monthly payment.

Use a Spreadsheet

If you want a bit more information from your loan calculator, including the exact amount of interest and principal you’ll pay over the life of your loan, try building a simple amortization schedule on a spreadsheet. Most spreadsheets include amortization schedule templates you can use so that you don’t have to build the entire thing from scratch. If you’re a little further along in buying process and you want to know the gruesome details of where every penny of your purchase price will go over the life of your loan, an amortization schedule is definitely nice to have.

Don’t Forget the Extras

Both a simple loan calculator and a more detailed amortization schedule won’t automatically include some of the extra expenses that get tacked onto your monthly payment amount. So be sure to account for taxes and insurance payments to get the most accurate estimate. If you want to get ahead of the game, you can always use a maximum mortgage calculator to help you budget for your perfect home.

If you’re ready to find your perfect home, start by inputting a few numbers in a loan calculator. It will help you narrow your home search and give you a better idea of what you can afford.