Closing costs are necessary costs charged by the mortgage lender to obtain a loan but the closing costs between mortgage lenders will vary significantly. The primary use of the closing cost calculator is to calculate the amount of funds required to close on a new mortgage loan. Use the mortgage closing cost calculator to figure out the amount of money needed to obtain a mortgage and then use that figure to compare closing costs from a several mortgage lenders to obtain the best mortgage loan to fit your needs.
Many mortgage shoppers often focus on the monthly mortgage payment and interest rate when comparing loan terms and products. While the mortgage rate and mortgage payment is a significant measurement when evaluating loans, the total costs or closing costs necessary to obtain the loan also needs to be taken into consideration. Comparing two mortgage loans based on rates and payments alone will tell not the prospective borrower which loan is more expensive. Full loan comparisons need to look at the whole loan costs including the closing costs and a key tool to help regarding this issue is the mortgage closing cost calculator.
As an example on the value of closing cost comparison, a loan (A) can have a mortgage interest rate of 5.25 percent for a $125,000.00 loan and another mortgage loan (B) may have a mortgage rate of 5.375 percent for the same loan amount. The lower rate loan (A) will have a monthly mortgage payment of $1,028.80 while the higher rate loan (B) has a monthly mortgage payment of $1.038.51. Based on this simple analysis, loan (A) is clearly the better deal. But, what if loan (A) has 1.5 origination points and a processing fee of $450.00, underwriting fees of $375.00, a $500.00 application fee along with other fees such as title charges and settlement charges that add another $1,250.00 to the costs. For simplicity sake, assume loan (B) has just $750.00 in total charges or closing costs.
Now, the results show a mortgage payment that is the same but with different loan closing costs. The mortgage payment is based on the amount borrowed, not the costs to obtain the loan or the actual amount of the loan that are delivered to the borrower if the closing costs are subtracted from the original loan amount. Note – with a home purchase, closing costs will be paid at the loan closing while a mortgage refinance may allow the borrower to roll the closing costs into the loan amount. Loan (A) has a payment of $1,028.80 and $4,450.00 in costs while loan (B) has a payment of $1.038.51 but only $750.00 in closing costs. Loan (A) has a lower payment by $10.51 and higher closing costs of $3,700.00. In this closing cost and mortgage rate comparison, loan (A) will save $10.51 a month but it will take 352 months to recover the difference in closing costs between loan (A) and loan (B).
The mortgage closing cost calculator calculates the mortgage settlement charges or closing costs based on a given set of loan terms. The mortgage calculator separates the categories of closing costs to assists the user in comparing cots for more than one mortgage loans or loans from more than one mortgage lender.
Closing costs include a variety of expenses over and above the price of the property or the amount needed to refinance and existing home loan. Mortgage lenders should be able to give potential mortgage loan borrowers an estimate of their fees and closing costs before they apply for a loan. Home loan borrowers need to keep these costs in mind when they are shopping and comparing new mortgage loans. Using the closing cost calculator will help facilitate this task and assist in comparing the numerous loan options in today’s mortgage marketplace.