According to Freddie Mac's most recent survey, 30-year mortgage rates are a full point lower than they were a year ago, providing buyers with a great chance to secure relatively inexpensive home loans. The low rates have combined with low property values to generate a homebuyer's paradise; however, buyers still need to be careful when targeting a home. The uncertain economy has made the mortgage payment calculator invaluable in today's real estate market. Before you call a lender, be sure you know what lies within your budget.

People struggling to qualify

Normally, affordable interest rates and low property values spur buyer activity; however, the real estate market remains sluggish thanks to tight lending practices that prevent many from qualifying for loans. Still, if you have good credit and a strong financial standing, you have the opportunity to acquire a very nice home you might normally be unable to afford. That said, to do this, you'll have to demonstrate to the lender that you have the power to consistently make your monthly payments. To do this, you'll need to assess your financial capabilities using a mortgage payment calculator.

Why it's so important in today's market

In the past, lenders offered risky loans to people with average credit scores and inconsistent income records; however, they aren't doing that anymore. When the housing bubble burst, lenders tightened their lending standards. Nowadays, to qualify, you have to prove that you can afford the loan you want.

Too often, potential buyers over-estimate their ability to meet their mortgage payments, because they fail to consider the impact of interest rates, property insurance, property tax and PMI. Additionally, lenders are now requiring much higher down payments, which can also significantly impact a borrower’s ability to meet monthly payments after they've secured a loan.

A mortgage calculator can help buyers understand what type of home they can truly afford, while saving them from big mistakes that might lead them to foreclosure further down the line.

Mortgage payment calculator not enough

Although average national interest rates remain low, you can't necessarily expect to acquire a low rate. Banks assess individual interest rates based on perceived risk. If you have dings to your credit, you can expect a higher rate, which will ultimately reduce your ability to buy a more expensive home.

Before you talk to a lender, get a copy of your credit report and ensure that there are no errors. If there are; get those corrected before you apply. Even a minor increase in your credit score could reduce your mortgage rates by a few points, which will save you thousands over the life of a loan. This will also result in lower monthly payments, which will make it easier for you to afford a more expensive home.