There are many tools you can use to simplify the home search and home buying experience, and a loan comparison calculator is one of the best in providing direction on your financial situation.
With this, you can quickly and accurately compare different loan types, loan amounts, interest rates, and down payments. Even if two options appear identical, it’s likely that there are differentiating factors at play.
Let’s look at how you can use a loan comparison calculator to compare different loans side-by-side and make the right choice.
How to choose a home loan?
No two people take the same path to choose a home loan.
You may be 100 percent sure of what you want based on the type of loan you’ve had in the past. Conversely, you may be purchasing your first home without any preconceived notions.
Here are three basic steps you can take to choose a home loan:
1. Decide on a budget
Before you can choose a home loan you need to decide on a budget. This is based on your financial circumstances, other expenses, and the payment you can secure through each type of mortgage.
For example, your budget may be $300,000 if you opt for a 15-year fixed-rate mortgage but $400,000 if you’re okay pushing the term to 30 years.
Tip: Contact a mortgage broker or lender for mortgage prequalification. This provides a better understanding of how much you can actually borrow.
2. Compare your options
Even if you have experience with a specific type of mortgage, don’t assume it’s the right choice the next time around. There are many options to choose from, including:
- Conventional mortgage
- Fixed-rate mortgage
- Adjustable-rate mortgage
- FHA loan
- USDA loan
- VA loan
- Jumbo loan
There are pros and cons of each type of mortgage, which you can use to confidently compare your options and begin to narrow your choices.
3. Consult with a loan officer
You can learn a lot about home loans online, but there will come a point when you need professional guidance. This is when you should reach out to a mortgage loan officer. They can answer your questions, share feedback, and help you understand how much you can afford to spend.
Talk to a Loan Officer todayHow a mortgage comparison calculator can help you
There is no shortage of numbers that impact your monthly mortgage payment. That’s why you need a loan comparison calculator to provide accurate numbers and help inspire questions to bring with you in conversing with your loan officer.
No matter which mortgage comparison calculator you’re using or what type of loan you’re seeking, the most important number is the loan amount. This is the amount of money that you need to borrow to purchase the property.
To get to this number, subtract your down payment from the agreed-upon purchase price. For instance, if you’re buying a home for $500,000 with a $100,000 down payment, your loan amount is $400,000.
Next, these are the other numbers you’ll plug into your calculator:
- Interest rate
- Loan term
- Start date
- Annual property tax
- Private mortgage insurance
- Annual home insurance premium
All of these numbers impact your monthly payment, so try to be as close to accurate as possible. Now, you can then begin to compare each type of mortgage.
Loan Option 1
Loan Option 2
Understanding your mortgage payments
Calculating your monthly mortgage payments can be tweaked by several variables. Let’s use a fixed-rate mortgage as an example. Answer these questions:
- What is the purchase price of the home?
- What is your down payment?
- What is your total loan amount?
- What is your interest rate?
- What is your loan term?
Once you answer these questions, you can also factor in property tax, private mortgage insurance, home insurance, and any HOA fees that may apply, to calculate an accurate monthly payment.
Critical questions for your mortgage lender
With a loan calculator, you can get a directional sense for the loan types you may be interested in, and how these solutions affect your budget. Once you are ready to speak with a loan officer, consider asking these questions to kick off your relationship:
- What interest rate do I qualify for?
- Can you explain the pros and cons of each type of loan?
- What can I do from a borrowing perspective to help my home offer stand out?
- Can you help me find a specific type of mortgage, such as a physician loan?
- How long does it take to receive a prequalification letter?
- What are your thoughts on the current state of the mortgage industry?
- Is there anything I am overlooking that will affect my loan and payment?
GO Mortgage is here for you
At GO Mortgage, we’re here to help you find the right mortgage loan and get the financing you need simply, easily, and fast!
It doesn’t matter if you’re a first-time homebuyer with a limited budget or an experienced buyer in the market for a vacation home, we’ll guide you through the process from beginning to end. .
Are you ready to speak with someone right now? Call us at (800) 444-RATE.
Get started with GO Mortgage