Using a payment calculator can help you make the big decisions in life such as buying a house or buying a car. These tools are very valuable and useful to help you with budgeting and planning for the future. A large number of people use these calculators to plan out their finances. Some use them to compute long-term investments and others use it to compute for retirement.

Enter the values one at a time on the left hand side of the calculator. Use this loan calculator to figure out your monthly payment, interest rate and down payment for your house. The monthly payment may change from one month to another due to some changes in interest rates or sometimes due to an introductory period. The down payment will be the amount that you pay down towards the mortgage. The total amount of money offered to the seller by an investor upon purchase of a real estate property also comes under the down payment. This is the final amount that you pay in order to buy the property.

Fixed Rate Mortgages: If you plan to apply for a fixed-rate mortgage in the future you must know the basic information about the mortgages. You should understand the amount of interest that you will have to pay and also the tenure of the mortgage. This is very necessary so that you can plan your finances in advance. If you know the tenure before hand then you can plan your budget properly. Sometimes mortgages come with a balloon payment option where the lump sum payment amount over the fixed term will be lower than the amount paid over the fixed term.

Private Mortgage Insurance (PMI): The payment for the PMI premium will depend upon your financial status and your personal preferences like choose a low deductible plan. People who have an average income and assets can go for a variable plan as they will have to pay a higher premium. Hence it is very important to keep this factor in mind while purchasing a private mortgage insurance (pmi) plan. There are many tools online that help you calculate the value of your property and the amount that you need to pay in case you are not able to pay the entire amount towards the monthly installments.

Another factor that affects the monthly payment is the down payment made by you. While purchasing a new home, you are usually required to make a down payment. A mortgage calculator helps you determine how much money you can afford to pay when purchasing a new home using the down payment that you have made. If you want to calculate the monthly payment on a new home using the down payment then you must include the closing costs. These include the mortgage insurance, taxes, and homeowner’s insurance.

Principal reduction method: The payment calculator can also help you determine how much you can reduce your principal if you are planning to refinance your current home loan. The principal reduction method has to be used with the annual calculation to get the monthly payment amount. This can be done by dividing the total principal outstanding by the total interest paid. This gives the value of the principal reduction and it can be helpful if you are planning to pay off your existing loan early or if you want to reduce your interest rate or your monthly payment amount.