A mortgage calculator is a term you might have come across if you are familiar with mortgages or taking out loans to buy property. The primary function of this calculator is simple: It helps determine the payable amount on a potential mortgage. There are a few parameters the calculator needs to get a result. People often stumble upon whether to use this calculator.

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By the time a 30-year fixed-rate mortgage is paid off, the typical mortgage holder will have made total interest payments significantly larger than the original principal on the loan.

Use the “Extra payments” functionality of Bank rate’s mortgage calculator to find out how you can shorten your term and net big savings by paying extra money toward your loan’s principal each month, every year or even just one time.

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To calculate the savings, enter a hypothetical amount into one of the payment categories (monthly, yearly or one-time) and then click “Show/Recalculate Amortization Table” to see how much interest you’ll end up paying and your new payoff date.

The lower initial interest rate of an adjustable-rate mortgage, or ARM, can be tempting. But while an ARM may be appropriate for some borrowers, others may find that the lower initial interest rate won’t cut their monthly payments as much as they think.

To get an idea of how much you’ll really save initially, try entering the ARM interest rate into the mortgage calculator, leaving the term as 30 years. Then, compare those payments to the payments you get when you enter the rate for a conventional 30-year fixed mortgage. Doing so may confirm your initial hopes about the benefits of an ARM — or give you a reality check about whether the potential plusses of an ARM really outweigh the risks.

You can use the mortgage calculator to determine when you’ll have 20 percent equity in your home. This percentage is the magic number for requesting that a lender wave private mortgage insurance requirement.

Simply enter in the original amount of your mortgage and the date you closed, and click “Show/Recalculate Amortization Table.” Then, multiply your original mortgage amount by 0.8 and match the result to the closest number on the far-right column of the amortization table to find out when you’ll reach 20 percent equity.

A mortgage calculator used to look kind of like your grandfather’s cell phone. A bunch of buttons, a little screen and a lot of punching in numbers to get a result. The mortgage calculator are of different category. It can calculate your monthly mortgage payment in no time.

The following advantages of this calculator will help you make a decision:

Budget Planning:

Let’s be honest; whenever you think of buying a house, there is always a budget that stops you from going all in. To stay within it is usually a challenge. With the mortgage calculator, you can know whether the house you wish to buy fits in your budget or not. In case the answer is negative, it will even tell you the amount of money that you will need on top of your current budget to get that house you want, thus helping with your budget planning.

Saving extra money:

The calculator lets you save some of those expensive dollar bills you’d normally waste on extra fees. Through the calculator, you can arrive at the amount to be paid in installments and the initial down payment. Knowing the interest rates and these other essential details will help you negotiate better and save yourself some extra money.

Time saving:

It is quite hectic to get a broker or banker to make sure whether you are in the right financial position to buy a house. With the mortgage calculator, you will know the verdict without any further external aid. This saves much time since you will be doing the calculations yourself and involving a third party won’t be necessary. The calculator will give you a comparative study on the prices of the house and the amount you can pay.

Here, you can do all the calculations. This will help you understand the situation more, let you choose the best way to repay and seal the deal.