Using mortgage calculators can be very useful in the early stages of planning, but one should know that these tools have limitations. Let’s look at some of them:
Mortgage calculators are trustworthy tools for estimates, but they’re not a substitute for formal loan disclosures or a full pre-approval process. As a mortgage broker, you can use them to guide early-stage discussions with your clients. However, make sure that they understand that the actual figures will depend on various things like property details and credit evaluations.
What mortgage calculators can leave out
Mortgage calculators are simple tools and don’t always include all the costs involved in homeownership. For example, they might not account for:
- PMI
- property taxes
- homeowners association (HOA) fees
These costs can add to your clients’ monthly payments. Because of this, the mortgage calculator’s result might be lower than their actual expenses. Another point to consider is that mortgage calculators don’t take your clients’ personal financial situations into account.
All in all, the numbers shown in a mortgage calculator should be viewed as estimates, not exact figures. The good news: the mortgage calculator we feature here includes PMI, property taxes, and HOA fees! Feel free to play around with it to get a feel for it before using it for a client.