Online Calculator Cautions
Online mortgage calculators are a popular and somewhat
useful way to compare different types of mortgage loans
in the comfort of your own home. Calculators assist
in doing complex and difficult calculations that may
be related to mortgages. It is this complexity that
makes calculators popular, but can also make them inaccurate.
Calculators are still useful if you keep some basic
facts in mind while using them for your mortgage calculations.
When dealing with certain mortgage types, no calculator
can ever be completely inaccurate. This is true of hybrid
and adjustable rate mortgages (ARMs), because these
types of loans will fluctuate in the future depending
on prevailing interest rates at the time. For this reason,
calculators can only accurately calculate the initial,
fixed rate period on these loans. Other calculations
are often based on a “worst-case scenario”.
While this can be helpful in informing you of the risks
associated with these loans, it is of little help in
determining exact repayment charges.
Another problem with mortgage calculators is that the
calculations often deal in basics and don’t take
some factors into account. You may find yourself asking
if the calculator has included insurance, property taxes,
or other factors in calculating your payments.
One simple way to determine what the mortgage calculator
has actually taken into account is to look at the questions
it asks you. The more questions asked, the more accurate
the information you receive will probably be. By including
more information in its calculations, the mortgage calculator
will usually arrive at a more realistic number.
Also, make sure to read the small print. Often calculators
are accompanied by very fine print to the effect that
the mortgage calculator company cannot be held responsible
for any misinformation received through incorrect calculations.
These disclaimers are there mainly to relieve the company
of legal liability, but could also indicate that the
calculator’s source is not particularly confident
of its accuracy.