A mortgage calculator is a helpful resource for homebuyers because it can quickly estimate what you can afford without many manual calculations. However, it’s essential to know what an online calculator can do and what it can’t. In this post, you’ll discover some not-so-open realities about mortgage calculators.
1. Estimations, Not Certainties
A calculator will only give you back data based on your input. Yet the ability to get a mortgage loan depends on multiple variables, such as property tax fluctuations and future interest rate changes. With the help of a mortgage loan expert, you may know how to input the correct data. While an online calculator is quick and convenient, you should know that the data is only an estimate. According to the Consumer Financial Protection Bureau, you’re significantly underestimating your costs if you only use a mortgage calculator to determine how much you can pay in a month
2. Some Calculators could be Intentionally Misleading
Most mortgage calculator providers have good intentions to help you get a quick estimate. However, others use the tool for other reasons, which means they don’t have your interest at heart. For instance, it’s easy to use online calculators as a lead generation tool. That means the owner wants you to key in your email to send you promotions and service offers. For other calculator providers, user experience is their top priority, so they compromise to make their calculator less intimidating. According to CNBC, some calculators leave out essential costs, such as property taxes, to give users a quick and convenient answer.
3. Most Calculators Have Regional Biases
A quick search on Google for online calculators, and you’re spoiled for choice. Thanks to their popularity, almost anyone with a website can offer them. That makes them quite generic and oblivious to differences in real estate markets. The real estate market in New York is different from that in Arkansas, thanks to factors like property taxes, insurance rates, and housing costs. For example, this mortgage calculator was made for Colorado primarily, which is why it can give a better estimate.
Instead of using generic calculators from news outlets and popular websites, you can use a local lender’s calculator. To get the most out of a mortgage calculator, start with a reputable provider unlikely to mislead you. Next, choose a mortgage calculator based on where you live to get a better estimate. Lastly, even with the right choice of a regional-based calculator, you should remember that you only receive an estimate.