Have you ever wondered what the amount would be if you only paid interest on your mortgage? An interest calculator helps you determine what can arise from a 15-30 year period on a fixed rate or adjustable rate type of scale. From an adjustable rate standpoint, you will know how a 5-7 year time of fixed interest impacts your mortgage and creates a stable payment period. After that period, you will either deal with a higher rate of interest or a lower one, and how either one will create a positive or negative impact on your finances. Let’s go over all the ways an interest calculator can help you make quality decisions in the future.
Keep Monthly Payments Lower
Let’s say you have a 5 year period of low interest on your mortgage. This means that you’ll be able to keep the payments low for a while, which is a great way to go if you would like to use that extra money toward other expenses. The market may continually increase its rates and that will certainly create a very high adjustable rate for your total mortgage. By using an interest calculator and understanding your allotted amount for monthly bills, you will be able to see how different rate types will affect your mortgage and finances.
Take Advantage of a Short Sale
On a different note, if you only want to keep your house for a small period of time within the low interest period, you could use the extra money to reinvest in the home and increase the market value dramatically. Make sure you have a good plan and know what choices will make your house more commercially viable. You could reap the benefits of a short sale and not have to pay a huge amount of a principal balance and keep your costs within reason. Be sure that you are not paying the bank a lot of money back from the sale. Profit is key in this type of game plan. Speak with a lender about the best way to go about this financial endeavor. It may be a bit risky so you should always take caution when it comes to short term financial matters. Use an interest calculator to gain some financial perspective in this situation.
Use an Interest Calculator to Assess Risk
Everyone wants to know what issues may arise in their financial futures based on their current decisions. An interest calculator can help with this in terms of your mortgage. For example, consider a situation where you want more of a long term plan and you come up with some numbers for both a higher or lower interest rate; calculate the interest only for the time period of that part of your payments. Afterwards, realize that you’ll be paying principal and interest which can skyrocket. If you find that you cannot afford it, this may not be the option for you. The higher loan balance can decrease your chances of future refinancing because the balance can get higher than your home’s actual market value. That disposes a big burden on you as a homeowner. Ultimately, if you even decide to sell the home, you could still owe the bank a lot of money. It’s never a good situation when what you owe becomes much more than that of your home’s worth. At that point, you are in a deep creek with a leaky boat so to say. Do your best to calculate these certain scenarios after the interest only period is over by utilizing an interest calculator.
Always Check with a Lender
At the end of the day, you should always be sure a lender gives you the “okay” and that you avoid certain situations that have major penalties; this could mean avoiding serious fees coming out of your own pocket. If you decide to refinance during the interest only period, certain lenders will penalize you with additional fees. Always be upfront with the lender and give them a realistic view of your income situation. If there’s no chance of your income increasing over that 5-7 period, a lender may not even consider you eligible for interest only. Be honest with yourself and know that you could be in a ton of debt if you don’t properly plan this method.
Keep a vigilant eye on the interest calculator to help you better decide if an interest only plan will work well for you and do your calculations early to see how it affects your mortgage. Try to come up with a plan that can help you increase the value of your primary property or set up an additional investment in another property that you plan to sell quickly. You’ll want to know what risks you can run into by calculating the interest and principal balance further in the mortgage.