Finding a mortgage approval calculator online can be easy to do, but tough to trust. There are some major variables in calculating a mortgage payment that can often be missed, and this mortgage approval calculator blog will help show you how to make the best use of the calculators you find online.
The video below talks about some of the reasons why home mortgage calculators can be hard to trust.
One huge one would be the type of loan. Let’s say for example an FHA loan. If you as the borrower, don’t know much about FHA financing, and use a conventional calculator, you’re going to miss some big steps! FHA loans have two types of mortgage insurance added into the loan. The first type is referred to as the UFMIP (up front mortgage insurance) which is financed in the loan, so out the gate, you must increase your loan amount by 1.75%.
The second type of mortgage insurance is the monthly insurance and this calculation depends on the loan to value of the loan, the term of the loan, 30 vs. 15, and also, the loan amount in some cases. So let’s say for example, you want to see what a 15 year payment would be on an FHA loan with only 3.5% down for a loan amount of $417K. The monthly calculation is going to be .60% of the loan amount divided by 12. But say the same scenario, you were to have a loan amount greater than $625,500, well then the monthly calculation just changed to .85%. The same goes for less than 10% as well. Any loan amount under $625,500 with greater than 10% down on a 15 year term would be .35% and anything less than 10% down, say 3.5% down would be .60%.
Having trouble keeping up? There’s more, we haven’t even touched the 30 year fixed adjustments! So as you can see, it’s important to talk to your trusted advisor when the time comes to figure out your loan payments according to your personal situation.