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Home Mortgage Preparation :: Calculate a Mortgage Payment
Calculate a Mortgage Payment:
Calculate and Crunch the Numbers for a Mortgage Payment
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When you calculate a mortgage payment, you're actually figuring out how much your monthly payments will be and how much house you can really afford.
Let's say you wanted to purchase a $200,000 “starter” home in your area, how much would you have to earn to qualify? How big a down payment would you make?
Unfortunately, there are no hard-and-fast answers to these questions. So much depends on what type of loan, your down payment, which lender and what interest rate you'll be charged.
To understand the difference down payments and interest rates can make, keep reading.
Ten Percent Down vs Twenty Percent Down
For a $200,000 home, a couple making a 10% down payment would put $20,000 down toward the purchase price while the second couple would make a 20% down payment of $40,000.
The first couple, making a 10% down payment would need a $180,000 loan. Based on current rates of about 7 1/4%, monthly principal and interest payments on a 30-year, fixed rate mortgage would be about $1278.
The second couple, making a 20% down payment would need a $160,000 loan. Their monthly payments on a 7 1/4 %, 30-year fixed-rate loan would only be about $1091 per month.
Private Mortgage Insurance
However, because the first buyers' down-payment would be less than 20% of the purchase price, they would also have to pay for a private mortgage-insurance policy that would reimburse the lender for any losses it might incur if it must eventually foreclose.
Monthly premiums for PMI, combined with the cost of hazard insurance, would boost their monthly outlays to $1,500. To qualify for the loan, the buyer would need to earn about $66,000 a year. Because of this difference in monthly costs, it's important to factor in PMI when you calculate a mortgage payment.
The buyer who makes the 20% down payment wouldn't require extra private mortgage insurance, meaning their payments would stay at the low rate of $1091 per month. To qualify, the borrower would only need to earn about $52,000 annually.
Lender Requirements
When a you and your lender calculate a mortgage payment, you'll also take into consideration your debt load, other expenses and property taxes. Also, your income qualifications may vary depending on the lender's requirements, your employment status and other factors like rental income.
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Home-Mortgage-Preparation.com :: Calculate a Mortgage Payment