Mortgage payment compare to the value of the house

By
Real Estate Broker/Owner with Texas Five Star Realty, Plano Texas

How much is the Mortgage Payment compare to the value of the house or the Loan on the Property?

   0.75%?       0.85%?        

Home buyers and real estate investors who want to purchase their property often wonder how much their Monthly Mortgage Payment would be. Of course, the best way to find this is to hire a REALTOR® or a Lender who has the knowledge, expertise, access to the required data & tools, and necessary programs to come up with the most accurate number for the specific property.

Disclaimer: Disclaimer
This article contains “rule of thumb” numbers that show the relationship between the values of the house vs. the total Mortgage Monthly Payment.  Please note that this is an estimate rule of thumb, is not an exact value, not to be used as legal advice or in a contract. This estimate should only be used as a guideline.

The Mortgage Monthly Payment depends on many factors such as:

Purchase price,
Down payment,
Interest Rate,
Term of the loan (e.g., 30-year fixed, 15-year fixed, ARM, etc.),
Type of the loan (e.g., FHA, VA, Conventional, etc),
Up Front and Mortgage Insurance Premium (e.g., FHA UPMIP and MIP, Points and PMI in Conventional),
Homeowner Association Fee (HOA),
Property Tax (e.g., City, County, School Taxes),
Hazard Insurance,
Flood Insurance (if any),

etc.

 

Based on several sets of assumptions, considering all factors shown above applicable to the range of prices, I calculated each and every item shown above as well as the Total Monthly Mortgage Payment. Please see Monthly_Payment_vs_Loan.pdf  for all detail calculations and all scenarios.

Please feel free to use Monthly_Payment.asp to calculate and determine all the above items and this ratio based on your specific data set.

 

A summary of this result, based on the following set of assumptions shown below shown in Table 1.

Assumptions:
Down payment,         = 20%
Interest Rate,             = 4.5%
Term of the loan       = 30-year fixed,
Type of the loan       =  FHA
FHA UPMIP              = 1.75%

FHA MIP,                   = 1.20%


HOA Fee (HOA),      = Ranges from $0 – to $75 per Month
Property Tax Rate    = 2.1883% for every $100  
Hazard Insurance,    = Ranges from $800 – to $2200 per Year,

Depending on the value of the house

 

 

Table 1: 20% Down Payment, FHA 30-year Fixed Rate of 4.5%
 

$ Purchase Price

$Loan Amount

Total Monthly Mortgage Payment

Ratio of the Monthly Payment to Loan

Ratio of the

Monthly Payment to the value of the House

$120,000

$ 96,000

$741.51

0.9041 %

0.7233% à 0.73%

$170,000

$136,000

$1,235

0.9082 %

0.7265% à 0.73%

$220,000

$176,000

$1,652

0.9388 %

0.7415% à 0.74%

$280,000

$224,000

$2,086

0.9314 %

0.7451% à 0.74%

 

 

$Purchase Price

Ratio of the Monthly Payment to the value of the House

$ OR the Value

100% Down

25% Down

20% Down

10% Down

5% Down

3.50% Down

$120,000

0.24%

0.62%

0.73%

0.78%

0.81%

0.83%

$170,000

0.24%

0.62%

0.73%

0.78%

0.81%

0.83%

$220,000

0.26%

0.64%

0.75%

0.81%

0.84%

0.85%

$280,000

0.26%

0.64%

0.75%

0.81%

0.84%

0.85%

               

 


As you can see in the above Table, I have concluded that the monthly mortgage amount is directly related to the home’s loan value and home prices, for a given loan type and loan term.

 

A good "rule of thumb" for home buyers and investors to estimate the total monthly mortgage payment, at least in Collin County, is the 0.75% factor. For example, if your property is worth between $220,000-$280,000, which is the most common range of values in Frisco, you could estimate its’ mortgage payment to be about 0.9% of its loan amount (assuming 20% down) or to be 0.75 % of the value of the house.

 

Another example if the value of a property is $220,000 or less, the Monthly Mortgage Payment for the property should be about 0.73% of the market value of the property (assuming 20% down)

 

Please feel free to use Monthly_Payment.asp to calculate and determine all the above items and this ratio based on your specific data set.

        

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Rainmaker
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Bahman Davani, CM at Texas Five Star Realty, Plano, TX (214) 457-7055

Homes for Sale in Plano, Frisco, Prosper, Allen TX
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