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Which Loan Calculator Should I Use?

man on computer using amortization calculator
These handy Web-based calculators can give you a good sense of what you’ll be getting into as a homeowner.

Technology today can help you do just about anything when it comes to your home. Want to see what a paint color looks like in a room before you put it on your walls? There’s an app for that. Want to see what a screened-in porch will look like on the back of your house? There’s software for that too.

And when it comes to purchasing and paying off a home, there are apps and calculators for that as well. One word of caution: “The calculators are a great way to start and get a feel for some general information, but consulting with a professional mortgage adviser well in advance of shopping for a home or refinancing one is the most reliable way to get good information and guidance,” says mortgage adviser Casey Flemingauthor of The Loan Guide: How to Get the Best Possible Mortgage.

Whether you’re deciding to rent or to buy that home for sale in Santa Fe, NM, or refinance your current home, there’s technology available for nearly every scenario. Here’s a look at the most popular home calculators available today.

Rent versus buy calculator

It’s exactly what it says. This handy little rent versus buy calculator helps you, well, figure out if you’re better off continuing to rent or if you should take the plunge and purchase a home.

“A rent versus buy calculator will show the tax savings incurred with owning a home versus renting one,” explains Yael Ishakis, vice president of FM Home Loans in Brooklyn, NY. Keep in mind, though, warns Fleming, that rent versus buy calculators often “use your tax savings to lower your housing payment as a homeowner. However, they don’t acknowledge that many first-time homebuyers are using the standard deduction and so the calculators oftentimes overstate the tax benefits of owning a home.”

Mortgage / amortization calculator

Everyone wants to know if they can afford a loan for a home. To get a good idea of just how much your monthly payment will be without having to go through the process of applying for a loan, mortgage calculators can help provide that general estimate.

“Customers are always wondering what their payment would be on a specific loan amount and oftentimes use mortgage calculators when determining this,” says David J. Hosterman, a loan officer with Castle & Cooke Mortgage LLC in Greenwood Village, CO. Before passing go, though, Hosterman recommends knowing exactly what loan programs you qualify for. “FHA and conventional loans have different rates, different down payment requirements, and different mortgage insurance calculations that need to be taken into account when utilizing a mortgage calculator,” he says.

“I also strongly recommend customers use mortgage calculators that incorporate mortgage insurance premiums with accurate percentage calculations of the upfront as well as monthly mortgage insurance figures. Mortgage insurance premiums are determined on loan to value along with credit scores. Essentially, if a customer is putting little down and has a lower credit score, their mortgage insurance premium will be higher than someone with higher credit putting the same amount down.”

Refinance calculator

Who doesn’t want to shrink their mortgage payment? Luckily, a refinance calculator can help you determine if going through the refinancing process can yield you huge savings — oftentimes hundreds of dollars — in your monthly payment.

In addition to providing an estimated savings on your monthly mortgage payment, a “refinance calculator will also calculate the cost to refinance,” says Ishakis, including things such as costs for the title agency and loan officer. Casey Fleming cautions, though, that “refinancing usually extends the term of the loan, and that isn’t accounted for [with a refinance calculator], so the savings [can be] overstated.”

What mortgage calculators have you used? Share your experiences in the comments below!