What is a Prequalification Calculator?

A Prequalification Calculator offers you an at-a-glance view of how much you'll be able to pay for your mortgage. It works by entering the following data:

Gross monthly income before tax deductions
Length of loan in years (also known as loan term)
Interest rate expressed as a percentage
Local property tax rate
Money available for down payment and closing costs
Other monthly obligations, which include credit-card payments, other loans, and other recurring payments such as child support or alimony

Prequalification Calculator

The Prequalification Calculator not only calculates your eligible mortgage amount, but also generates a prequalification letter stating this amount.

How Do I Use This Information?

Real estate agents and mortgage lenders alike often require prequalification before showing you properties or working with you to get a mortgage loan. By running the numbers and getting a prequalification letter ahead of time, you can not only save time and trouble when looking for a new home and then financing it, but you can also save money in the process. When you know how much you're qualified to receive for a mortgage loan, you can negotiate with lenders in order to get the most competitive loan terms possible.

A new home purchase costs more than the price tag of the mortgage loan itself. There are all kinds of associated costs with buying a new home, many of which you may not be aware of. That's why it's important to understand these costs before you begin the home buying process – it's better to understand how these can add up before you begin the process of looking for a new home and a means of financing that purchase.

Here is a list of some of the major costs of buying a new home. Keep in mind that this is not an exhaustive list by any means and that every real estate transaction is different, so do your research before signing on the dotted line.

Loan origination fees, which apply to any new mortgage loan
Inspection fees, which are essential so that the buyer knows there are no major problems with the home that haven't already been disclosed by the seller
Appraisal fees, which are required by the lender to confirm that the home is worth its stated value. These are required for the loan to go through.
Any money that needs to be placed in an escrow account. You may need to deposit a minimum amount into this account before your loan can close.
Fees for any title insurance and title work, which assures that the title is correctly passed to the buyer to avoid any problems down the line
Any fees for a mortgage broker, attorney, or real estate agency