Fixed-Rate Mortgage Calculators

• The fixed-rate mortgage calculator is fairly simple to understand. You only need to plug in three numbers to make it work. You'll use the amount of you need to borrow, your interest rate and the term of your loan in years. Simply type in these numbers and press calculate and you will get your monthly payment amount and the length of time it will take you to pay off your loan if you make each payment on time and only for the amount that is due.
  
  

Adjustable-Rate Mortgage Calculators

• Adjustable-rate mortgage calculators are a little trickier. You'll need the loan amount, interest rate and term, just like in the first example, but you will also be required to enter the length of time before your loan adjusts initially and at what interval it will adjust thereafter. For example, a 3/1 ARM will adjust after three years and then every year for the life of the loan. You will also have to guess how much your rate will go up at each adjustment. Ask your lender or track the industry trends yourself. The last number you'll need is the cap, which is the highest your interest rate will ever go. This will help you not overestimate your monthly payment. The amount the calculator gives you will be what you most likely pay after your first adjustment plus what your payment will be at its highest. This will of course be an estimate.
  
  

Summary

• So how does the calculator work? It inputs the numbers you give it into a simple mathematical formula that is programmed into its code. It is not much different from a formula in Excel. It's just dressed up in a calculator form to make it more friendly and accessible to the user. Remember, a mortgage calculator can only provide a good estimate. For more exact numbers, be sure to speak to a mortgage lending professional.