Weekend Availability + Figuring Out Payments in Your Head

Real Estate Professionals, 

I will be available this weekend to assist with your clients' pre-approvals, offer letters and home loan questions.  If I can be of service, feel free to reach me on my cell phone at 415-367-5959, or by e-mail at rspinosa@rpm-mtg.com. 

Often at open houses or on broker tour I'll get asked, "What would the payment be on that loan amount?"  Now that we are seeing interest rates right around 4.000% on many programs, here's an easy way you can calculate (30-year term) payments in your head and on the spot:

Assuming the buyer puts down 20%, for any purchase price, take 1% of the purchase price, multiply it by 4, then divide by 10, and that's roughly your P&I payment.  For example:

Purchase Price:        $500,000
1% of $500,000:      $5000
x 4:                       $20,000
Divided by 10:
P&I Estimate:          $2000
Actual payment for a $400K, 30-year loan at 4.000%:  $1909 

How about FHA, you say?  Well, in these cases, we know that the buyer will have mortgage insurance and will need to impound taxes and insurance.  So it is fair to give them a payment number for PITI instead.  Here's the rule of thumb for FHA assuming a minimum, 3.5% down payment: 

For any purchase price, 2/3rds of 1% of the purchase price roughly equals the PITI payment.  For example:

Purchase Price:       $500,000
1% of $500,000:     $5000
$5000 x .66:   
PITI Estimate:       $3300
Actual payment for a $482,500, 30-year loan at 4.000%:  $3450

Robert J. Spinosa Home Loan Professional DRE: 01297944 NMLS: 22343 591 Redwood Hwy. Suite 1150 Mill Valley, CA 94941 877.270.5959 Toll Free 415.367.5959 Cellular 415.366.1590 eFax rspinosa@rpm-mtg.com