Calculating Your Monthly Mortgage Payments

By
Real Estate Broker/Owner with 1 Month Realty 49855-090

Calculating

 

 

Calculating Your Monthly Mortgage Payments

One of the most important factors to consider when buying a new home is affordability.  As a general rule, mortgage payments should not exceed 25-30 percent of your monthly take-home pay.  The best way to know what you can afford is to determine the possible payment range by comparing the price of the home with other essential ingredients.

Borrow 

Figure Out How Much You Want To Borrow

Your first step to calculating your monthly mortgage payment is knowing how much you want to borrow.  This can be determined by subtracting your down payment amount from the purchase price of the home, which will give you the amount that you will need to request from a lender.

Rates 

Know Your Rates

The next step is to determine the current interest rates for the purchase of a home.  Rates vary and may change often, so check with your lender for current rates.  It's worth noting that the interest rates you receive will, in part, be based on your credit history.  This means that knowing your FICO score and credit rating will give you a good idea as to how your interest rates will be calculated.

Terms

Choose Your Loan Term

Your monthly mortgage payments will be determined by a number of factors, including the term of your loan.  If you were to borrow $250,000, your monthly payments would be less with a 30-year mortgage than with a 15-year mortgage.  The reason is because it would take larger monthly payments to get the loan paid off quicker, which is why you will need to select a loan term before calculating your payments.

 

Costs

Additional Costs To Consider

Your total mortgage payment will include taxes, homeowner's insurance and possibly even private mortgage insurance (PMI) if you provide less than 20 percent down and your loan requires it.

 

Additional costs 

Just The Facts & Figures

Now that you know how much you need to borrow, have chosen your loan term and are familiar with the current interest rates, it's time to calculate your payment.  Most lenders offer a mortgage calculator on their Web site or you can get an estimate by speaking with your lender.

 

http://www.buykenoshahomes.com/bin/web/real_estate/AR219743/CALCULATOR/Pleasant+Prairie/1403682435.html

 

If you still need help in calculating your potential monthly mortgage payments, don't hesitate to ask your REALTOR®, mortgage broker or lender.

 

Comments (4)

Tom Arstingstall, General Contractor, Dry Rot, Water Damage Sacramento, El Dorado County - (916) 765-5366
Dry Rot and Water Damage www.tromlerconstruction.com Mobile - 916-765-5366 - Placerville, CA
General Contractor, Dry Rot and Water Damage

Diana - I can see this being important to someone looking for their estimated payments.

Aug 22, 2014 04:10 PM
Les & Sarah Oswald
Realty One Group - Eastvale, CA
Broker, Realtor and Investor

Diana,

Great resource of information. This will come in handy for buyers looking to determine their monthly mortgage payment. Some have the added cost of taxes and insurance added to their payments in addition to  escrow account fees.

Aug 22, 2014 04:32 PM
Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi
NMLS #216987, IL Lic. 031.0006220, WI Licensed. APMC NMLS #175656 - New Lenox, IL
708.921.6331 - 40+ yrs experience

Diana:  Currently, I'm finding two factors that have grown in importance regarding monthly payments and ability to buy.  Those being taxes ... and HOA fees (which enter into more and more scenarios).  You prove why it's so important to work with professionals that can provide the info and guidance needed along the way ...

Gene

Aug 23, 2014 03:09 AM
Diana Dahlberg
1 Month Realty - Pleasant Prairie, WI
Real Estate in Kenosha, WI since 1994 262-308-3563

Tom Arstingstall: It's definitely the starting point ... knowing what "this will cost me"

Sarah Oswald: Buyers need to "count the cost" before making that plunge. Thanks for your comments.

Gene Mundt: No doube, Taxes and HOA must be considered because they both can change the monthly cost to put you "out of the park". Thanks for your comments.

Aug 23, 2014 03:39 AM