Buying a house represents the single most expensive investment that most people make in their lives. As such it takes careful planning to ensure that the mortgage you are planning to take out is going to be affordable. The easiest way to do this is by using a mortgage loan payment calculator to calculate the mortgage payments you are going to be making every month for the next 15-30 years. If the payments are not going to fit into your budget comfortably, you may need to rethink your decision to buy or settle for a smaller home.

While using a basic formula to calculate mortgage payments is only going to give you a rough idea of what your actual payment will be, it can help you to decide if you are going to be able to afford to buy the house you are looking at. Having this information at your fingertips can also save you wasting both your time and that of your bank or financial institute applying for a loan you cannot afford.

The formula is only going to provide you with an estimate of what your base payment is likely to be based on the principal amount of the loan, the interest rate you expect to be paying and the term of the loan. It will not take into account any extraneous charges such as insurance and property taxes, which many banks insist on being rolled into the loan payment.

Where once these formulas were the sole domain of lending institutions and not available to the general public, this is no longer the case, thanks to Internet. Today you will find that there are many sites that provide a free home mortgage calculator. You can get this information very easily and in many cases they also have simple instructions to teach you how to use it, that are easy to follow.

The formula is very simple to use, but first you are going to need to have an idea what the current interest rate is. Try contact several banks and then add up the interest rates they offer divided by the number of banks. Take this number, the amount of the loan and the number of months you are planning to finance your home for and enter it into the online formula to calculate mortgage payments and the calculator will give you the answer you need.

You can then use this information to decide if you can afford the mortgage you have been considering, especially with low mortgage rates today. If not you may want to consider a smaller home or try and come up with more of a down payment to reduce the amount of your monthly payments to something you can readily afford.