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Loan Comparison Calculators

When you are looking for a mortgage, it may not be obvious to you what type of loan would best suit your needs. If you have a lot of questions, you should find out as much information about each type of mortgage as possible. Once you get your options together, make sure you understand everything about each loan type before making a decision.

After you have found out what each type of loan is and what it offers, you may still have questions. Knowing the differences between fixed rate mortgages and adjustable rate mortgages, for example, does not necessarily mean you know how to accurately compare them, especially when specific terms are involved.

Calculations involving mortgages, especially those that involve multiple terms and factors, can be confusing or hard to make. This is even truer if you aren’t experienced with making mortgage comparisons. One way to help in making the comparison is using a loan comparison calculator.

These calculators can be found online and make it easy for you to compare loan types. The calculators have spaces for you to enter the terms of the loans you are considering. The calculator then uses these terms to calculate information that would help you decide which loan is best for you.

For a fixed rate mortgage, a common calculator might want you to enter the loan’s term, interest rate, and amount. For an adjusted rate mortgage, you would also enter all three of these items, plus the maximum interest rate, the number of months before your first adjustment, the months between additional adjustments, and, if applicable, the maximum rate change for each adjustment. The calculator may also want you to enter the number of years you plan to hold the loan before you sell your home of pay the loan off, perhaps through refinancing.

After you enter these variables, the calculator might tell you the total payments you would make, the total interest and principal you would pay, the remaining balance at the end of the time specified, and your total savings for each loan. Some calculators also provide you with a payment schedule, telling you what your monthly payments for each year.

While the calculator is helpful, it isn’t always perfect. For a loan like an adjustable rate mortgage, where the rate can vary according to future conditions, the calculator can’t tell you what the actual variation will be.

It assumes the worst case scenario, so you can decide if you could afford the consequences, or if the risk of this scenario is worth the reward of lower initial payments. Rather than informing you if you can accept this risk, the calculator helps quantify the risk for you, so you can make a decision based on concrete facts