The 6 Types of Mortgage Calculators & How to Use Them

The 6 Types of Mortgage Calculators & How to Use Them
Mike Randall
By: Mike Randall
Updated: July 24, 2014
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A standard mortgage calculator is an automated tool designed to help you figure out a payment amount based on mortgage variables like interest rates, type and length of the loan and the amount being financed.

There are many styles and types of mortgage calculators available, but all will have similar features and functionality.

This guide is intended to familiarize you with the types of mortgage calculators out there, when to use which type and the capabilities they have.

Depending on what you need it to do, most mortgage calculators are very simple to use. Some even have the ability to input insurance, taxes and other fees.

Here are the primary mortgage calculator types and how to understand them.

1. Mortgage payment calculator

This type of mortgage calculator will help you to determine the payment amount on a fixed rate or variable rate mortgage.

In order to calculate it, you will need to know the amount of the loan, the amortization period (length of the loan), the interest term and the interest rate and type. Most calculators of this type will then tell you the expected payment amount and annualize your mortgage balance.

2. Mortgage refinance calculators

Existing homeowners who are contemplating refinancing want to know whether it makes financial sense to do so.

This type of mortgage calculator will show you things like whether refinancing from an ARM to a fixed rate mortgage will be worth the cost. You will need to know what your current adjustable rate terms are and what fixed rate you are likely to qualify for.

This calculator also will help you to understand whether a lower rate will offset the cost of refinancing.

 “These are handy tools to have

when shopping for a mortgage.”

3. Mortgage payoff calculators

These mortgage calculators are designed to show how different payment schedules and extra payments will affect the mortgage payoff date and the amount of interest that will be paid.

Mortgage payoff calculators are especially useful for people who want to build equity faster and reduce the amount they pay in interest.

4. Mortgage comparison calculators

Using a mortgage comparison calculator, you can see the side-by-side differences between a fixed rate and an ARM mortgage, or you can compare two ARM mortgages with different terms to see which one best fits your needs.

5. Mortgage points calculators

A mortgage points calculator can be very useful in determining the break-even period on a mortgage when paying points.

The concept of points can be confusing to many home buyers, but this calculator allows you to see the effect on your payment and terms when you pay points upfront.

6. Second mortgage calculators

For homeowners considering taking out a second mortgage, this type of calculator will show you the effects on your mortgage and the resulting overall payment.

They also can calculate and show you the effects of taking out a “piggyback” mortgage, where a first and second mortgage are taken out at the same time.

This is a complex calculator, but it can be very helpful in figuring out how to structure a mortgage with less than the standard 20 percent down.

As you can see, mortgage calculators come in a variety of types, each with slightly different features.

It’s a great idea to explore the various types that are available for free online. Because of the variation in interfaces, some may be easier to use than others, so you should experiment.

One thing is certain, however, these are some very handy tools to have when you’re shopping for a mortgage. Good luck!

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