5 Alternative Ways to Use a Mortgage Calculator

A mortgage calculator is one of the most commonly used online mortgage tools for home shoppers, and for good reason. It can give you a good idea of whether or not you can afford a home loan and help you see what a particular home might cost.  But did you know that you can do even more with a mortgage calculator? Here are five alternative uses for Zillow’s mortgage calculator:

1. Figure out which loan type to choose

The loan type you use to finance a new home can make an impact on your monthly mortgage payment. To see how much, just choose

your desired loan type from the “Loan program” drop-down on our mortgage calculator.  The payment will automatically change to incorporate the average interest rate and term for your selected loan type. Seeing this impact on the monthly mortgage payment can help you decide which loan type is right for you.

Here’s a breakdown of the loan type’s you’ll see in our mortgage calculator:

• 30-year fixed: Typically, the 30-year fixed mortgage has the lowest payment amount, but the highest interest rate. This is the most common loan type.
• 15-year fixed: The 15-year fixed mortgage will have a higher payment amount than a 30-year fixed loan but a lower interest rate, which means you’ll pay the loan off faster and pay much less interest over the life of the loan.
• 5/1 ARM: The interest rate for 5/1 ARM loans is usually much lower than a fixed-rate loan. However, with ARMs (adjustable rate mortgages), this rate can change every year once the initial fixed period ends, which can increase your monthly payment. If you're considering an ARM, make sure you understand how much your payments could increase.

If you’re looking for an FHA or VA loan, you can select any of the loan types from the drop down. Mortgage insurance is not required for VA home loans, and in most cases, a down payment isn’t required either. For FHA loans, you’ll be required to put at least 3.5% down, and you’ll have to pay a monthly mortgage insurance premium.

2. See the impact of different interest rates

The interest rate you get for your home loan can have a major impact on your monthly mortgage payment. You can see this impact by entering different interest rates into a mortgage calculator. Our mortgage calculator automatically includes the average interest rates for the loan program that you’ve entered, but you can change this number to see the impact of having a higher or lower interest rate.

If you’re not sure what interest rate to enter, you can see your estimated mortgage rates on Zillow or quickly find to a local lender on Zillow to see what rate you would qualify for.

3. See where your money will go every month

The total monthly mortgage payment you make every month doesn’t just go towards down the principal; it goes towards several different costs. Using a mortgage calculator can show you exactly where your money will go. Just make sure the “Include taxes/ins.” box is checked.

Here’s a list of items you may see in your mortgage calculator results on Zillow:

• P&I: P&I represents the portion of your monthly payment that goes towards the principal and interest for your home loan.
• Insurance: Insurance is the estimated cost of homeowners insurance due every month. You can adjust this value in the mortgage calculator’s advanced options.
• Taxes: Taxes show the estimated property taxes based on the home’s value and location. You can adjust this value (or opt to remove the taxes and insurance) in the advanced options.
• PMI: PMI is private mortgage insurance (or “mortgage insurance premium” for FHA loans), which is often required if the down payment is less than 20% of the home’s purchase price. You can remove this in the advanced options of our mortgage calculator.

4. See the total amount of interest you’ll pay

Our mortgage calculator’s monthly payment breakdown will show the amount of interest you’ll pay each month, but you can also see the total amount of interest paid over the life of your loan. Click the “Schedule” tab above your mortgage calculator results to see an interactive graph showing the principal and interest paid (as well as the remaining balance) for each month. Hovering over this graph can show you the total amount of interest paid at any given point of over the life of your loan.

5. Figure out what to offer and put down on a new home

A mortgage calculator can be used as a tool when you are considering what to offer on a new home. By entering different loan amounts in our mortgage calculator, you can see if going under or above the asking price still fits within your monthly budget. If you’re adding an escalation clause, you can get an idea of how much your monthly mortgage payment might be if the escalation clause kicks in.

You can also play with the down payment amounts to see the impact of putting more or less money down. For example, a higher down payment will lower your monthly payments by reducing the amount of money you borrow, and in many cases, it can help you qualify for a lower interest rate. Making a down payment of at least 20% of the home’s purchase price can also help you avoid paying private mortgage insurance (PMI).

Ready to buy? Take the first step and get pre-qualified.