Important Definitions To Know When Using A Mortgage Calculator

GIGO. It’s a tech acronym for Garbage In Garbage Out that illustrates putting bad (inaccurate) data into a program will always cause it to give you bad information and results. GIGO applies in the world of Mortgage Calculators as well. So that you can get the accurate information you need and make the most of the Mortgage Calculator at American Capital Corporation – or anywhere for that matter – here are some key definitions for you.

Amount – It is the amount of your mortgage. For example, if you are putting $60,000 down on a $300,000 home, you need to borrow $240,000. So, $240,000 is your mortgage Amount.

Term -The maximum time in years (or months) you plan to take to repay the loan. 15, 25, 30 or even 40 years are common Term lengths.

Interest Rate – The percentage of your unpaid loan you will pay each year for using the money to buy your home.

Points – A Point is one percent of the loan amount that is often charged as a fee to lower the Interest Rate. Paying Points will cost you more up front and can save you thousands of dollars over the life of a long Term loan.

Extra Costs – Extra costs are funds for monthly Homeowner Association Fees, or money set aside monthly to pay Property Taxes, Insurance, etc.

Monthly Payment – The Monthly Payment is the combination of your monthly principal and interest payment (PI).

Total payments – Total Payments is the grand total of all monthly payments against the principal and interest over the full term of the mortgage.

Total interest – Total of all interest paid over the full term of the mortgage. This total interest projected here assumes that you do not make prepayments of principal – which will shorten the Term and reduce the Total Payments..

To learn how to use different Mortgage Calculators, come see the Orange County Mortgage Experts at American Capital Mortgage for video tutorials.