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How To Use A Mortgage Calculator
By DANIEL FEININGER
Mortgage calculators can help you determine a realistic and feasible way to finance your home according to your financial viability. This tool is essential in finding which loan will be right for you while maintaining financial stability.
One of the most important variables to consider when taking out a mortgage is the down payment figure, as it can significantly change the amount you need to pay back monthly. In the past, a 20% down payment was the traditional rule of thumb, but today, the median down payment is 12%, and 6% is the average down payment.
Knowing the amount you’ll owe on the loan and the loan term that will determine how long it takes to pay back your home are crucial. National interest rates are 5.46% on 30-year, fixed-rate mortgages, and 4.69% on 15-year fixed-rates, but remember a calculator cannot estimate the variability from sellers, so negotiating down the price can really change your figures.
Your debt-to-income (DTI) ratio brings your dream into reality as it takes into account your financial obligations — like car loans, student debts, or credit card repayments — when budgeting. Typically, a DTI rate of 43% or lower should be your goal, and by using a mortgage calculator, you can begin to see how your finances will play out in the long run.