Mortgage calculators are a dime a dozen online. You can find them on nearly every real estate and financial website. They’re quick and easy to use, and they can give you a good idea of what your monthly mortgage payments might be.
However, mortgage calculators in Albuquerque are far from perfect, and there are a number of myths and misconceptions about them. Here are 10 of the most common mortgage calculator myths, busted!
Mortgage Calculators Always Give Accurate Results.
This is perhaps the biggest myth about mortgage calculators. The truth is, these tools are only as accurate as the information you input into them. If your estimate of your home’s value or your income is off, your results will be off, too.
Mortgage Calculators Can Tell You Exactly How Much House You Can Afford.
Again, this is not always the case. A mortgage calculator can give you a good idea of how much you can afford to spend on a home, but it’s not an exact science. There are a number of other factors that come into play when determining how much house you can afford, including your down payment, your credit score, and your debt-to-income ratio.
You Should Always Put 20% Down When Buying a Home.
This is another common mortgage myth. You’re not required to put 20% down on a home in order to get a mortgage. In fact, you can put as little as 3% down on some loans. You may pay a higher interest rate if you put down less than 20%, but it’s not a hard and fast rule.
A Higher Interest Rate Will Always Mean Higher Monthly Payments.
This is not necessarily true. While a higher interest rate will result in higher monthly payments, the amount of your loan also plays a role. For example, if you take out a $250,000 loan with a 4% interest rate, your monthly payments will be $1,195. But if you take out a $500,000 loan with the same interest rate, your monthly payments will be $2,390.
A Longer Loan Term Will Always Mean Lower Monthly Payments.
Again, this is not always the case. While a longer loan term will result in lower monthly payments, the interest you pay over the life of the loan will be greater. For example, on a $250,000 loan with a 4% interest rate, your monthly payments would be $1,195 for 30 years or $1,614 for 15 years. But the total interest paid over the life of the loan would be $93,000 for 30 years or $66,000 for 15 years.
You Should Always Choose the Loan With the Lowest Interest Rate.
Interest rates are important, but they’re not the only factor you should consider when choosing a mortgage. You should also look at the fees associated with the loan, as well as the terms and conditions. A low-interest rate is not always the best deal.
Mortgage Calculators Can Tell You How Much Your Property Taxes Will be.
Mortgage calculators can’t always accurately predict your property tax bill. Property taxes can vary widely from one location to another, and they can also change over time. If you’re looking for an estimate of your property taxes, you’re better off contacting your local tax assessor’s office.
Mortgage Calculators Can Tell You How Much Your Homeowner’s Insurance Will be.
Similar to property taxes, homeowners’ insurance rates can vary widely from one location to another, and they can also change over time. If you’re looking for an estimate of your homeowners’ insurance costs, you’re better off contacting a few different insurance companies.
Mortgage Calculators Can Tell You How Much Your Closing Costs Will be.
Mortgage calculators can give you a good idea of your estimated closing costs, but they’re not always accurate. Closing costs can vary depending on a number of factors, including the type of loan you choose, the lender you use, and the state in which you live.
Mortgage Calculators are Always 100% Accurate.
This is perhaps the biggest myth of all. Mortgage calculators are only as accurate as the information you input into them. If your estimate of your home’s value or your income is off, your results will be off, too.