Why All Mortgage Calculators Aren't Accurate for Estimating Housing Costs
Are you spending more money on monthly expenses than your mortgage calculator estimated? This is a common issue that can quickly become a prominent financial pain point. Although mortgage calculators are vital to framework your budget, there are a lot of misconceptions and overall misuses of these tools.
The Myth About Mortgage Calculator Accuracy
Many people swear by the mortgage calculator to make sound financial decisions. The only problem is that it is only as strong as the information you have. The more information you have, the better it will assist you in getting factual estimates. Just using the basic two elements of the calculator is a trap you need to avoid.
Most Calculators Used For Mortgage Estimates Are Too Basic
Basic mortgage calculators only implement two of the elements that are required for a precise estimate. They provide estimates using your interest payment and your principal payment. They can provide you with a good start, but they won’t paint the full picture of all your monthly expenses.
There are six important costs that need to be included on any great mortgage calculator:
- Property Tax costs
- Insurance costs for being a Homeowner
- Association fees as a Homeowner
- PMI (Private Mortgage Insurance) costs
- Costs of utilities
- Closing costs
Use A Mortgage Calculator Properly
In order to get accurate estimates of your mortgage payments, you have to use the calculator the proper way. Doing otherwise will leave money unaccounted for, which could play a major part in your mortgage payments. Many people only use their interest and principal payments, which will underestimate your monthly expenses.
Using basic calculators for your monthly mortgage estimates can be detrimental to your finances. Make sure to account for all factors and not just down payment and mortgage when calculating your monthly costs. Many first-time homebuyers are guilty of this and end up in jeopardy, living outside their means. If you use a calculator the lazy way, the calculator will give you a lazy estimate.
Remember, the more research and information you have, the more precise your estimate will be. The more effort you use now will lead to less stress in your financial future.
For more information on mortgages, call Spectrum Realty today at (416) 736-6500 or contact us here.