Mortgage insurance calculators are used to calculate different aspects relating to mortgage insurance. They can calculate the length of time for which a person will have to keep making insurance payments on his or her mortgage. This period is displayed in number of months.
Mortgage companies secure their sold mortgages by taking an insurance policy on them. The premiums of this insurance policy are passed on to the people who have bought the mortgage, and are bundled into their monthly payments. The insurance premiums may not run for the entire duration of the mortgage. Mortgage insurance calculators help to determine how long the mortgagor will have to continue insurance payments on the mortgage.
This calculation is actually a very simple task. There are six important figures that are required to be inputted into the calculator – the current property value, the value of the property at the time of taking the mortgage, the current interest rate, the current balance amount, the monthly payment and the expected appreciation rate of the property.
A person has to pay insurance on the mortgage until the time the value of the remaining mortgage reaches 78% of the current property value. Each month a payment is made, a portion of it goes toward the principal value of the mortgage. Hence, the mortgage value falls down month after month. Once the residual mortgage value is below 78%, the mortgagor is no longer liable to pay any insurance premiums on it. Alternatively, there are no insurance premium payments to be made after the mortgage balance falls below 80% of the appreciated property value.
Buyers of mortgages may waive insurance premiums in lieu of higher interest rates on their mortgages. But more often than not, this is a tricky decision to make – whether to go for higher interest rates or to settle for paying mortgage premiums. There are special mortgage insurance calculators that can help buyers of mortgages decide this aspect. Such calculators can help to compare the total interest costs over the mortgages and the total portion of payments done towards mortgage insurance premiums.
Free mortgage insurance calculators are available online. Several mortgage-related websites feature simple, easy-to-run programs which can help buyers decide insurance aspects of their mortgages.