A very handy tool used often in today’s mortgage industry is a mortgage payment calculator. By entering a few pertinent details about your finances, the calculator will provide all kinds of data that will help you find exactly the right home to meet your financial needs.

By entering your income, cash on hand for closing costs and down payment, and a desired interest rate, the mortgage payment calculator will formulate a price range for the homes you should be looking at. It will also compute your monthly payments and let you know how much of each payment will be allocated for interest and how much will reduce the principal balance on the loan.

By entering various interest rates, the mortgage payment calculator will show you how the different rates affect your buying power. The lower the interest rates, the higher the price of the home you are likely to qualify for.

To see the effect on your monthly payments, use the mortgage payment calculator to determine payments based upon the length, or term, of the loan. A 30-year mortgage is the most common but substantial amounts of money can be saved in the long run by securing a mortgage for just 20 or 15 years.

Make a down payment the variable in your calculations and the mortgage payment calculator will adjust all mortgage data accordingly. This is one way to find out how advantageous it is to take all your money from savings and investments to use for a down payment instead or if it might be better to use just a portion of your investments and keep the rest where it is.

Here’s a fun one – if you know you will qualify for a loan of, say, $500,000 but the home you really want is only $350,000, use the mortgage payment calculator to demonstrate how much money you’ll save by being frugal versus frivolous, or vice versa.

A mortgage payment calculator is very easy to use and it will provide a wealth of data that may eliminate some confusion or disappointment once the house hunting begins. You’ll be glad you took the time to play with numbers first.