Dave Ramsey’s View on Mortgage and Bankruptcy Calculators

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Dave Ramsey is well-known for the personal business’s financial expertise, famous for developing the Baby Steps to Debt Elimination and Financial Independence. He regularly shares his opinions on a wide range of financial topics and has developed several internet services to assist people in managing their finances.

Dave Ramsey has spent considerable time building a mortgage calculator on his site, but we don’t see him as vocal about bankruptcy.

It’s no secret that the mortgage application procedure may be overwhelming, which is why it’s essential to fully understand what a person can afford and which products and programs are ideal. There are several free online mortgage calculators available to help calculate mortgage payments. But how can one determine which websites are reliable?

Therefore, In this article, we’ll go through everything you need to know about Dave Ramsey’s mortgage calculator and cover all the good and bad aspects of it.

Understand Mortgage Calculators

Mortgage calculators are computer-assisted tools that enable users to assess the financial ramifications of altering one or more variables in a mortgage financing arrangement. Both clients and lenders use mortgage calculators to determine monthly payments and the economic viability of a home loan application. It might be a valuable tool for calculating how much one can afford to borrow for a home purchase. It can estimate the monthly mortgage payment and obtain an estimate of how much interest one will pay over the life of the loan in just a few minutes. It also assists in comparing monthly payments for the same loan amount, whether the mortgage rate is fixed or adjustable.

On the other hand, mortgage calculators are only as good as the data you enter into them. Unfortunately, many of these calculators ignore essential elements like property tax, insurance, and other costs that can substantially impact your monthly payment. So keep in mind that the more information you offer the calculator, the more accurate the figures you will obtain. Therefore, it is critical to utilize a calculator that incorporates all vital parameters—missing some information may result in an incorrect estimate of the monthly payment that might leave one with some serious challenges.

We all know that a free online calculator can be a reliable source. It may provide some basic information but, it cannot warn about the unseen difficulties. For example, these programs cannot account for factors such as the home’s location, a buyer’s job situation, or closing expenses and fees. In addition, it may show someone eligible for a loan but missing out on factors like private mortgage insurance, causing one to have an increase in the monthly payment.

Considering the mortgage statistics of New Hampshire differing from mortgages in New York City, it is critical to consult with a trained professional, such as a real estate agent or mortgage broker, before using mortgage calculator data. These professionals know precisely to use which ones are most suited to individuals specific on their way to homeownership.

Understand Bankruptcy Calculators

Dave Ramsey has views on bankruptcy, but he seems to be pretty quiet when it comes to bankruptcy calculators. A bankruptcy calculator is based on the bankruptcy forms. For example, you would take a Chapter 7 calculator to help you estimate whether you would qualify for a Chapter 7 bankruptcy. You would take a Chapter 13 calculator to help you estimate what your Chapter 13 plan payment would be.

These calculators can help you determine various helpful things before having a bankruptcy consultation with a bankruptcy attorney. You can also understand the cost of bankruptcy along with the pros and cons of bankruptcy.

Dave Ramsey’s Mortgage Calculator.

A monthly mortgage payment is a combination of a variety of expenditures. The Ramsey mortgage calculator’s payment breakdown reveals precisely where the planned cash will go. Therefore, to comprehend the data of the Ramsey calculator, it is essential to grasp all relevant variables first.

Know the Value of a House.

The first step in using the Ramsey calculator is to enter the worth of the house you wish to purchase based on the exact value of your budget.

Upfront Payment.

A down payment is the initial cash payment made when purchasing a property. The calculator computes the suggested down payment as a monetary amount and a percentage of the total purchase price.

Compare Different Mortgage Types.

You have the option of choosing between three mortgage types:

  • 15-Year Fixed-Rate Mortgage
  • 30-Year Fixed-Rate Mortgage
  • 5/1 Adjustable-Rate Mortgage (ARM).

Ramsey also includes detailed explanations of each mortgage type immediately below the calculator for quick reference

Prime Interest Rate.

The calculator uses the interest rate to determine the total amount of interest fees you will pay over the life of the loan in percentage.

Insurance.

Homeowner’s insurance is an essential requirement in most states. However, it may vary based on the state, the value of the property, and other connected external elements. Moreover, the calculator also includes private mortgage insurance (PMI).

Property Taxation.

Property taxes may get determined by the government and may vary by municipality, state, and, in some cases, house value.

Pros.

One of the benefits of Dave Ramsey’s mortgage calculator is that you don’t have to be a financial expert to use it. Instead of complexity, it is built for everyday users offering great insights as below.

  1. The design is adaptable, allowing you to change every critical component of identifying a suitable mortgage, providing simple calculations and straightforward advice to everyone with complete and monthly breakdowns on clear visual of pie charts. Easy interface allows users to play with parameters to get the right mortgage plan.
  2. Approved partners of Dave Ramsey’s calculator offer an option to select local real estate agents.
  3. Calculators assist in determining how much to offer on a home and whether the seller is asking too much. You may also see how making a more significant down payment lowers your monthly expenses. If the home’s value gets modified in the calculator, the recommended down payment will vary.

Cons.

There are several significant restrictions to consider with any mortgage calculator. The following factors are not taken into consideration by Dave Ramsey’s mortgage calculator:

Extra things to Consider: Your monthly salary determines how much you can afford to pay on a mortgage. There are several additional expenses to consider during the home buying process, such as loan fees and origination fees. Closing costs are also unavoidable and may include appraisal fees.

Accelerated payments: If you plan to make more principal payments each month to minimize your interest payments throughout the life of the loan, an online calculator will not take that into account.

Planning additional insurances: The calculator doesn’t give any different options to add more insurances unless the user knows a specific one. It’s difficult to determine how to include this in the calculators if users don’t have any prior information.