Buying a house is a huge endeavor and will most likely be the biggest purchase a person makes in a lifetime, next to buying a car. Before making the decision to buy a house, it's a good idea to make a plan of the steps to take. There are many considerations to make, such as; where will the money come from for payments, utility bills, insurance, and any emergencies. Using a mortgage calculator to figure out how much monthly payments will be is a very helpful tool provided by many loan companies.
Once you figure out how much will be needed for loan payments, then you can figure in the cost of utility bills, insurance, food, and other necessities. The calculator option to figure out the monthly mortgage payment is very simple to use and only requires a few pieces of information. The values that need to be plugged into the calculator include; value of the home, amount of the loan, interest rate percentage, how many years the loan is for, the start date of the loan, percentage of property tax, and the PMI.
After all this data is entered into the calculator, the Mortgage Repayment Summary and Monthly Versus Bi-weekly Payments information is displayed. The Repayment Summary will show how much each payment will be per month, the total number of payments that will be made, how much the total amount of interest paid will be, the date that the loan will be paid off, and the total amount of tax that is paid over the entire life of the loan.
For the Monthly vs Bi-weekly Payment information, this is exactly what is shown. The monthly payment amount is listed right next to the bi-weekly payment amount.
Below that is listed the pay-off date for each payment type and the total amount of interest that will be paid during the life of the loan, for each type of payment system. This is a very quick way to see up front just how costly this whole procedure will be.
Now that the monthly amount for the loan has been determined, a budget needs to be made for where else the monthly paycheck will need to go. Besides the loan payments, the paycheck has to be divided into various categories; health, car, and house insurance, utilities, food, toiletries and other necessities, plus some money should be set aside for emergencies. Adding a little extra money into the budget for each category will provide some leeway.
It's too bad that the mortgage calculator won't automatically figure in all of these amounts as well, in order to provide a quick show of the final amounts needed. This does take a bit of time to figure out, but it will be well worth it in the end.
Deciding to buy a house on a whim isn't such a good idea. Hoping you will have enough money to cover costs can turn an otherwise joyous occasion into a horrendous nightmare. There are many choices of worksheets offered online that will assist you in plugging in all the appropriate numbers for budgeting costs, making it much less of a hassle. |
