Remember the good old days of simple interest when you didn’t need a mortgage calculator? Where each payment paid the same amount of interest and principal until the last payment? Sure made figuring out a home loan simple to understand and easy to calculate.
But wait! This is the 21st century. Today we have adjustable-rate mortgage loans, first-year payments containing 75% or more interest, and complex loan calculations only a computer can love. Do not try these calculations yourself, you will need a mortgage calculator.
One of the most accurate that is available for free on the internet is the Karls Mortgage Calculator available at DrCalculator dot com. It was created by Karl Jeacle and is even protected by copyright. You can’t buy it. However, lenders and mortgage brokers are encouraged to link to the calculator for free on their own websites.
Using simple sliders along with graphs and charts, you can see how much and how quickly you’ll pay interest and how much and how slowly your principal will pay off. Karl even built in a great feature that automatically accounts for changes in the inflation rate as reflected in the economy. The calculator also includes great features for calculation scenarios, including adjustable interest rates, additional payments, and prepayments. The calculator is completely interactive and does not require you to reload the page to see the results of the changes you make.
Here are just some of the features Karls Mortgage Calculator offers:
– The amortization chart shows the interest and principal amounts paid as part of the monthly payment over the life of the loan.
– The repayment chart shows you how much you will pay in total interest and total principal expressed as a percentage and in pie chart format.
– The balance graph displays a curve that represents the principal balance still owed over the life of the loan.
– The interest graph shows the annual percentage rate over the life of the loan, which is really useful for adjustable rate mortgages.
– The annual table graph shows the amounts paid annually in interest and principal plus the remaining balance over the life of the loan.
– The monthly table graph shows the same as the yearly table graph but on a monthly basis.
– The payment table shows you how additional payments will affect your monthly payment and balance due.
– The summary table shows you all the total amounts associated with your mortgage loan.
I highly recommend playing around with Karls Mortgage Calculator as the results can be truly amazing. For example, consider a 5% fixed rate loan for 30 years for a home value of $250,000 as of January 1, 2011. The monthly payment will be $1,342 with total interest of $233,141 and total payments of $483,138. By reducing the payment period to 20 years, the monthly payment is now $1,649 with total interest of $145,973 and total payments of $395,973. Your monthly payment only increases by 23%, but your total interest payments decrease by 37%.
I’ll leave it as an exercise to the reader to test the same loan scenario with a repayment period of only 15 years. I think the amortization graph showing the monthly interest payment paid and the principal paid where the two curves converge will make you seriously consider a 15-year loan period. I’m sure you’d like to save over $127,283 in interest payments and even own your home in half the time! Try using Karls Home Mortgage Calculator today.