Be Smart with a Student Loan Payment Calculator

2007-03-08 10:33:40

( Financial )



If you are planning to take out a student loan, a mortgage, an interest only mortgage, or the fully amortizing mortgage, you have to know what you are getting yourself into before you make a purchase. With this, you have to use a student loan payment calculator for the task of accurately comparing the repayment cost and your current financial situation.

A loan payment calculator, in its simplest sense, will help you find out how much payments you will have to make every month. A student loan payment calculator will help you find out how much payments you would have to make on your student loan, whether it be subsidized or unsubdized.

But a student loan payment calculator does much more than estimate your monthly payments. It can also estimate the amount of salary you would have to make to meet your monthly loan payments. As you know, forewarned is forearmed in any situation. A loan would require monthly payments and you must know if you can meet it. Furthermore, you’d have to know that your future earning potential would be able to compensate for the size of the student loan that you took out now.

A loan payment calculator is not only useful for students. Somebody who has a mortgage, particularly an interest only mortgage, has to have an estimate of what the interest only mortgage payments will be. During the period where your interest only mortgage rate is requiring just the interest payments, you would need to know your interest only mortgage payment per month. Then you can compare this to what your monthly mortgage payments would be if you get a fully amortizing loan instead. Only if you know how much the difference is can you decide if the differential is worth the risks. As you know, if the differential will not do you a lot of good as it is, it would be better to get a fully amortizing loan where that differential would at least be acquiring you more equity.

Also, bear in mind that an interest only mortgage does not stay that way forever. After a set period of years, you will have top make amortizing monthly payments. By using a loan payment calculator, you would also be able toe estimate how much your loan payments would be at that time and if your expected income would be able to support that jump in monthly mortgage payments.

To sum up, you need to think hard before getting any loan at all. And if you do decide to get a loan, do it the smart way by using a loan payment calculator first.


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