The first thing that may have come to your mind if you’ve thought about purchasing a home is the mortgage payment. And you wouldn’t be the first home buyer family to want to know that monthly amount so you can decide whether it is wise to proceed. Or maybe you and your spouse know you have the means to purchase a home but are still curious about the mortgage and its long-term effects on your finances.
We believe calculating your personalized mortgage is your first step toward homeownership and getting your kids the house they’ve always dreamed of growing up in. You may have felt anxiety and worry about moving forward with purchasing your dream home, wondering if it’s possible, and we want to walk through your custom-tailored mortgage solution.
Take advantage of our mortgage loan calculator so you can have peace of mind when considering a home purchase!
How Do Mortgage Calculations Work?
Mortgage calculations have several factors that total your personalized amount that our mortgage calculator or a lender can do for you. However, you can also follow this mathematical formula and input your loan and financial information to get an estimate. This process will help inform your buying decision and give you more idea of what all goes into your mortgage.
M = P[r(1+r)^n/((1+r)^n)-1)]
- M = Total monthly mortgage payment
- P = Principal loan amount
- r = Monthly interest rate. Mortgage lenders often give you an annual interest rate, so your monthly interest rate will be the annual rate divided by 12.
- n = Total number of payments over the life of the loan. This is the number of years in your home loan term multiplied by 12 (e.g., 30 x 12 = 360 payments, if the mortgage spans 30 years).
Other Loan Figures for Your Mortgage Payments
You need to check with your lender to calculate your exact mortgage payments since the loan they give you determines this amount. However, there are other variables you need to consider to obtain your true monthly mortgage. These numbers come from your principal, interest, taxes, and insurance that your lender establishes with you during the homebuying process.
- The Principal is the money your lender allows you to borrow
- Interest is your fee to the lender for providing the capital for your home. Most loans show their interest rates as annual percentages.
- The Taxes portion of your monthly mortgage payment are your property taxes. Your local government will set the home’s property tax according to their state-by-state ordinances.
- Your Homeowners insurance premium will pay for fires, vandalism, theft, natural disasters, and other damages that happen in your new home. It is a policy you purchase alongside your home that your lender lumps into your monthly mortgage payment. They will cover the premium when it is due, but your family will have to pay one-twelfth of the annual premium each month.
Weigh Your Mortgage Against Your Finances
After receiving your personalized mortgage payment, you can weigh it against your current finances to determine whether your dream home is a house you can afford. Your lender will do this for you already since they approve your loan by looking at your income, debt, credit score, and employment. Their home loan advising and your discussions with your spouse will help you figure out a manageable payment.
We recommend considering your home loan from our mortgage calculator before you proceed too far, trying your family down with debt you cannot pay. In turn, that will create a life your kids will regret as they grow up.
One common rule many lenders suggest for deciding on a mortgage is the 28/36-percent rule. This principle tells you not to spend more than 28% of your income on a mortgage and no more than 36% on your total debt (mortgage, credit cards, student loans, etc.). A balanced financial approach will stop you from constantly wondering bring peace to your spousal arguments and confidence in your homebuying journey.
How Do I Lower My Mortgage Payments?
There may be a specific home you’ve found that gives your family the work/life balance you need as a vacation spot. It can also be the farmhouse or acreage home you’ve always wanted for your kids. However, just because your home loan is outside your current budget does not mean it is out of your financial grasp. You have the option to lower your mortgage before or after the loan is active, so you do not sacrifice your dream home.
For example, extending your loan’s life for lower monthly payments can move your family into the home you have your eyes on. The overall interest rate will increase, but you can pay on principle and expire your loan’s life quicker, counteracting this. Also, a larger down payment of 20% or more can prevent you from paying Private Mortgage Insurance, which is a fee that most homeowners loathe paying in their monthly charge.
Finally, you must choose a specific loan type that meets your family’s financial goals, such as a 15/30-year fixed-rate mortgage or adjustable-rate mortgage. They have unique economic benefits that will increase your ability to buy a home, but you will need to speak with your lender, as this is on a case-by-case basis.
Home Lenders Can Calculate Your True Mortgage
Our online mortgage calculator is an excellent start for your family to figure out whether homeownership is a viable option right now. Or it can help you discover some figures to get an idea of what you might pay. However, we know you need to speak to a home loan advisor to get the most accurate picture of your mortgage.
Not only will they create tailored loan options by talking with you and your spouse about your current income and debts, but they will also advise you on the best real estate path forward. We believe lenders are a great party to ask questions if you’re still on the fence about home buying and you think the mortgage price will get in the way. Our team would be happy to be a resource as you consider a home by calling our office at (480).800.8387.