Free mortgage calculators are a great home buying tool. You can use
a mortgage calculator to determine the approximate monthly payment on a
home loan. In this way, mortgage calculators can help you set your
"comfort zone" for mortgage payments.

To determine your mortgage
comfort zone, you need three things: a budget, a price and a mortgage
calculator. For the price, just start with the cost of a house you
think you might be interested in buying.

At first, don't worry about whether the price is too high -- you'll find that out soon enough when you run the numbers.

Next,
run the home price through a free mortgage calculator at current
interest rates and at a 30-year fixes mortgage. (You might choose a
different mortgage type later on; but this exercise is just to get a
ballpark mortgage payment based on home price, so choose the 30-year
fixed option for the sake of simplicity.)

Mortgage loan
calculators can easily be found on the Internet. Just type "mortgage
calculator" into any major search engine, and you'll find several.

Sample Mortgage Calculation

Let's say I've done some research and found that a home in my preferred
area with the number of rooms I want, and offering the features I have
in mind, comes to about $200,000. I plan to get a loan for 80% of this
amount and then split the remaining 20% between a down payment and a
second mortgage.

Side
note: If your down payment is less than 20%, most lenders will require
that you pay mortgage insurance (see glossary at the end of this
guide). One way to get around this is to obtain a second mortgage from
a second lender. A common example is the 80-15-5 breakdown; which means
80% from a primary lender (first mortgage), 15% from a secondary lender
(second mortgage), and 5% down payment (out of pocket).

Getting
back to our mortgage calculation, I want to find out what my mortgage
payment would be on $160,000 (80% of the home price of $200,000). So I
go to www.mortgage-calc.com (one of many free mortgage calculators
online) to run the numbers.

For "principal," I enter $160,000.
For "interest rate," I enter 5.75%, which is the current interest rate
at the time of this writing. Most mortgage calculators will have this
field filled in for you, based on current rates. For "number of years"
I put 30.

Remember, we're just trying to get a ballpark monthly
mortgage payment. There are many different loan types to choose from,
but for demonstrations purposes we've chosen a common type of mortgage
(30-year fixed).

I hit the "Calculate" button, and this is what I get:

Your Monthly Payment for 30 Years

for an Interest Rate of 5.75 %

on a Loan Amount of $ 160,000:

$933.72 a Month

I
would run these numbers through at least one more mortgage loan
calculator, just to validate them. Then I would repeat the process for
my second mortgage amount. Of course, if you can afford to put 20% down
and avoid the second mortgage scenario, the math is much simpler.

Now
I can more accurately figure this price range into my budget -- a quick
and easy way to see if I'm in or out of my comfort zone, and to find
out exactly what my comfort zone is in the first place.

* You may republish this article online if you retain the author's byline and the active hyperlinks below.

About the Author
Brandon Cornett is the publisher of Home
Buying Institute, the Internet's largest library of home buying tips
and advice. For a variety of free mortgage calculators, please visit http://www.homebuyinginstitute.com/calculators.php