Enter the full purchase price for your home in this field. If you haven't found your property yet and are using this calculator to explore various mortgage and refinance rates, enter your best guess. You can look at some homes within the area to see what they're going for and put in a ballpark figure based on that initial research. When in doubt, choose a purchase price that's on the higher side. That way, you'll plan for a higher mortgage payment, and if it so happens that you find something less expensive, that will be a bonus!
Enter the amount of money that you plan on putting down. You'll receive the best rates and offers if you put at least 20% down. While you can get a mortgage with as little as 0% down (VA loans don't require anything down, for example), your options are frequently much more limited. Additionally, if you're looking at getting a jumbo loan, most banks will mandate that you have at least 20% down, and they won't extend credit to people with less than that amount.
If your purchase price would result in having less than 20% down, you can use this calculator to see if any lenders would still give you a loan. If not, consider reducing your purchase price so that you'll have 20% down.
Using the dropdown, select the approximate bucket under which your credit score falls. If you're unsure what your credit score is, consider getting a copy of it from freecreditscore.com
. Many credit cards and banks are now providing your score for free, as well, so check to see if one of your credit cards is offering this benefit. Please remember that you don't need your precise score. Simply selecting the right bucket will let you see your best offers!
If you don't have access to your credit score, consider that the average US credit score is around 690, so selecting the Average or Above Average option from the dropdown would result in offers that you could likely get once you apply. Before applying, though, it's best to check your credit score first. Every time you apply for a loan, you get a hard inquiry, which hurts your score a little. Therefore, you'll want to be sure you'll get approved before you apply!
Select either purchase or refinance from the dropdown menu. If you're buying a new home and obtaining a new mortgage, you'll want to select the purchase option. If you already have a mortgage and want to adjust the terms of your existing mortgage or take some cash out, then you'll want to select the refinance option. Choosing the right selection for what you want is vital to ensure that you see the best offers available to you in your area!
There are multiple types of mortgages. Most people buy homes using a conventional 30-year fixed mortgage. With this loan, you'll make equal monthly payments over 30 years until the balance is zero. You can get fixed terms for ten years, 15 years, and 20 years as well. The shorter the period, the lower your interest rate will be.
You can also get adjustable-rate mortgages (ARM). With these loans, you'll lock in an interest rate for a specific duration (the most common is five years). During this term, your monthly payment will be the same. At the end of the five years, you'll need to obtain a new loan for the remaining balance on your home. If the interest rates are lower, you'll receive that lower rate with the new loan. If they're higher, however, you'll pay more.
Using the dropdown, select which loan types are most appealing to you. Most people choose the 30-year fixed for its simplicity and its fixed monthly payment.
From the dropdown, select the number of points that you're willing to pay. As a reference, one point will reduce your interest rate by 0.25%. That point will also cost 1% of the property's value at closing. Therefore, points are a form of prepaid interest. You pay money upfront to spend less over time. A quick example would be a mortgage for $500,000 at 3.5%. If you spent two points, you'd pay an extra $10,000 at closing, but your interest rate would only be 3%.
If you plan on spending a while in your new home (typically over five years), points are worth it. However, if you might sell your home sooner, choose a loan with 0.5 points or 0 points.