Fixed Rate Mortgage Calculator: Looking Ahead

2008-10-15 10:52:29

( Financial )



A mortgage is the pledging of a property to a lender as a security for a mortgage loan. In other words, the mortgage is a security for the loan that the lender makes to the borrower, and so it is important to find out how much you can afford to pay before you borrow.

A fixed rate mortgage is a mortgage loan where the interest rate remains the same throughout the term of the loan, as compared to an adjustable rate mortgage where the rate may adjust. Fixed rate mortgages are characterized by their interest rate including compounding frequency or the accumulated interest back to the principal, amount of loan and the term of the mortgage. The calculation of the monthly payment can be done with these three values.

Calculating your mortgage payments can be done using a mortgage rate calculator and depending on the type of mortgage loan, there is an adjustable rate mortgage calculator and a fixed rate mortgage calculator.

With a fixed rate mortgage calculator, you can determine the monthly mortgage payment on a fully amortizing fixed rate mortgage at different loan amounts, interest rates and terms. What this calculator does is to actually show you the monthly payment you have to make when the interest rate, term and loan amount are entered. This has the advantage of having the security in knowing the exact amount you will repay each month, even though there may be changes in the interest rates. Of course, this makes your budgeting easier because you can plan ahead knowing exactly how much your monthly repayments will be.

Although the information you will get from a fixed rate mortgage calculator is intended to provide you with a figure, be sure to consult a financial professional prior to relying on the results as there are other factors or costs that may not be applicable to your individual situation. Nevertheless, before making any decision on applying for a mortgage loan, it is good to know that you will be able to see what is coming down the road.


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