Mortgage Payment Calculator – Work Out Your Monthly Mortgage Payments
The mortgage payment calculator is a very effective tool for a prospective borrower looking to calculate future monthly mortgage payments. It is a practical tool to calculate the cost of virtually any type of loan from the jumbo loans and USDA loans to VA home loans and FHA loans.
Anyone can benefit from a little help with calculating costs. Monthly mortgage payments take into account plenty of variables, such as principal, taxes, insurance, interest rates, loan length, etc. It is the quickest and simplest solution to get an idea of what your mortgage payment may be.
Using the Mortgage Calculator
The mortgage payment calculator is a versatile tool with many different practical functions. It has the ability to calculate the maximum amount you can invest on a property based on your monthly income and the total monthly payment due based on key information like the proposed purchase price and latest mortgage rates.
Let’s take a look at a few of the key items of information used in the process of calculating the mortgage payment:
The home price relates to the contractually agreed price for buying your dream home. This price is likely to include add on fees like the closing costs and loan fees. Other terms include the listing price which is essentially the price the home is marketed for sale on a website or elsewhere.
The interest rate on a home load can vary from person to person. It is basically the rate a borrower repays to their lender after taking out a mortgage. There are two types of interest rate: adjustable rate and fixed-rate. The adjustable rate will see fluctuations in the monthly payments, while the fixed rate is more stable with no change in the rate.
Duration of loan
This is simply the total period of time the mortgage lasts. A typical home loan is in the region of 15, 20, or 30 years, which is plenty of time for the borrower to pay off the loan. Applying for the longer loan term helps to lower the monthly mortgage payments, but there will be more interest to pay. For instance, on loan duration of 15 years, the interest paid is nearly 65% less compared to taking out a loan that lasts for 30 years.
The down payment relates to the amount of equity that is given to the lender at the time of taking out the mortgage. For instance, if you are looking to buy a home for 300,000 with a 5% down payment, the total amount to be saved is $15,000.
The actual amount of down payment will vary will the different mortgage programs. On the FHA loan the typical down payment requested is 3.5 percent. Other conventional loans may have a higher requirement. However, there are certain options like a USDA loan and VA loan that are still able to accept a zero down payment.
In the process of buying a home it is essential to consider all associated costs that not only includes the down payment, but also other items such as the closing costs.
A homeowner’s insurance plan is a standard requirement for taking out a mortgage. It is needed to protect the property in the event of a catastrophic, major or minor loss. The total coverage will vary from state to state, but it is essentially needed to cover the full cost of having the home rebuilt.
Also, to simplify the process of paying the home bills, it is possible to divide the property taxes and homeowners insurance into 12 installments and pay this with the mortgage payment each month.
The property taxes relate to home assessed taxes that are paid directly to the local government, state, or city. The rate of property taxes varies with a typical range between 1.5 to 2 percent of the home’s value. The tax is billed on an annual basis.
The Homeowners Association (HOA) fees are paid by the owners of a town home, a planned urban development (PUD) or condominium. The fees are due on an annual, semi-annual or monthly basis. This is a fee that is in addition to any governing body for the association or the management company. This type of fee is used to cover the cost of landscaping, upkeep, and elevator maintenance, as well legal costs to assist tenants and residents.
Private Mortgage Insurance (PMI) is a further type of insurance that is paid by the borrower to give protection in the event of defaulting on payments. In case of a default, the lender has the insurance as a backup to receive payment. It is typical with conventional loans when a down payment sum of 20 percent or less is paid.
A further type of insurance is Mortgage Insurance Premiums (MIP) which typically applies to FHA loans and USDA loans.
The monthly payment is simply the amount the borrower is obliged to pay every month of the mortgage term until it is fully paid off. This payment may include other costs such as homeowner association (HOA), if applicable. Also, the amount can change with changes in interest rates, which is certain to apply to those with an adjustable rate mortgage. There will be a more stable monthly payment for those on a fixed-rate loan.
The principal is the total amount that a bank agrees to lend to a borrower. This amount is slowly paid back over the full term of the mortgage, which can range from 15, 20 or 30 years. The ability to continue paying down the mortgage principal helps to increase the total equity you hold on the property.
The annual income relates to the total income you are able to provide documented proof of. This income can relate to W-2 income, alimony, K-1 distributions, social security income, child support and pension.