Mortgage Calculators

What do you do with a mortgage calculator?

My mortgage calculators can help you with many things. You can estimate your monthly principal and interest mortgage payment, not including property taxes, homeowners insurance, mortgage insurance if needed, and any required HOA fees. There’s another mortgage calculator to analyze fixed rate mortgages versus adjustable rate mortgages. There is also a mortgage payoff calculator that can help you determine what it would take to make pre-payments to pay your loan off early, or determine how much you have left on your mortgage balance. There is a mortgage qualifying calculator that can give you an approximation on how much mortgage you might qualify for, although it’s better to go through a full preapproval process for the most accurate analysis. And last there is a rent versus buy calculator. You’ll find more notes on all of these calculators if you scroll to the bottom of this page.

How is each mortgage calculator used?

Carefully think through the data that you enter for each input. It’s important to realize that the numbers that result from each calculation are approximate and not guaranteed, and should be confirmed by speaking to a mortgage loan officer. You can try out different numbers and variables for different options. Always remember that any calculations done online are only to be used as an approximate guide, always talk to a mortgage loan officer to get the most detailed answers.

What is a mortgage?

A mortgage is an agreement between you and a lender that allows you to borrow money to purchase or refinance a home. However, if you do not make your payments at some point the lender would have the right to take your property through a foreclosure process. Always be careful to assess your financial situation to make sure you can meet your obligations. While a mortgage lender may approve you up to a certain mortgage amount, they do not take into account other financial goals and needs you may have, like desired savings and investment goals, childcare, travel plans, family financial obligations, utilities, and more.

Do I need a down payment to buy a home?

You typically need a down payment to buy a home, which is a percentage of the sales price. The required down payment varies depending on a lot of variables, such as loan size, property type and debt ratios. If you are a veteran you may be eligible for a $0 down payment VA loan. There are first time homebuyer Conventional loans that you may be able to do as low as a 3% down payment depending on the variables.

Does my down payment matter?

A down payment of 20% or more will get you a loan with no mortgage insurance. And a large down payment means a lower loan amount and a lower monthly payment. If you can’t put 20% down, a higher down payment would mean cheaper mortgage insurance. For example 10% down has a lower monthly mortgage insurance cost than 5% down, and 15% down has a lower monthly mortgage insurance cost than both 5% down and 10% down. And some scenarios require a 20% down payment or more, such as Jumbo loans, also called Non-Conforming loans. However, putting more money into your down payment means taking it out of an investment or bank account that may be earning interest or dividends, so there’s a cost for putting more money down. Some people would rather put a lower down payment down and stay more invested. That’s a discussion for a financial advisor, after getting pre-approved by mortgage loan officer.

What loan term should I do?

The term of a loan can vary. I have seen loan terms of 10 years, 15 years, 20 years, 25 years and 30 years. This is how long it will take to pay off the loan. The most common loan term is 30 years. Lower terms mean you would pay less interest, but your monthly payment would be higher. Mortgage term is another thing that is important to analyze carefully, possibly discuss with a financial advisor, and talk to your mortgage loan officer about when you get pre-approved for a mortgage.

What interest rate will I get?

The interest rate that you pay will vary according to numerous variables. Things that affect your interest rate quote are credit score, property type, loan size, debt ratios and more. The interest is the money that you will pay to the mortgage lender that you borrow the money from. If your loan is sold, the interest rate and other terms of the loan do not change.

Principal & Interest

Principal and interest are two different things. The principle is the amount of money that you are borrowing divided over the months of the term of the loan, paid back in equal installments every month. Remember that with a mortgage you are paying back both the principal amount that you borrow, as well as interest on the principal. The interest is the fee you pay to borrow the principal and is determined by the interest-rate that you are charged.

Property taxes

The property taxes are charged by the county or city that you live in.  Property taxes are based on a percentage of your property value, which can change from year to year. Your property taxes will depend on the assessed value of your home and the tax rate charged by your local tax assessor. You may be required to pay your property taxes through an escrow account, and the lender will pay each tax bill as it comes due, from that escrow account.

Homeowners insurance

Homeowners insurance issued by an insurance company protects your home and personal belongings. An insurance policy protects you against loss from fire, theft, and may include other types of damages like water damage, earthquake and flooding if you are in a flood zone.

The homeowners insurance premium is the yearly amount due for the insurance. When homeowners insurance is required to be paid in your monthly mortgage you will put money into an escrow account and every month pay one 12th of the annual premium into the escrow account, and the mortgage lender will pay the insurance bill directly with your insurance company.

Always make sure to ask a lot of questions and speak in detail to your insurance company and make sure you’re getting the coverage needed for your area, and that you will be insured for the hazards that are common to your area.

Private Mortgage insurance (PMI)

Private mortgage insurance is typically charged if you have less than a 20% down payment. 3% down has the highest mortgage insurance cost, then 5% down, 10% down, and finally 15% down. Any down payments that are in between those percentages will not have a cheaper PMI. For example, if you wanted to do a 12% down payment, the PMI rates would be the same as 10% down PMI rates. A second example would be if you had a 7% down payment, the PMI rates would be the same as 5% down PMI rates.

Private mortgage insurance on a Conventional loan is not permanent, and there is a possibility that you can get rid of mortgage insurance at some point in the future depending on the appreciation of the property and other variables.

HOA fees

Some properties have HOA fees. HOA fees are not included in the monthly mortgage payment, you would pay those directly to a property management company, not the mortgage lender. A condominium or townhouse will usually have HOA fees, and some single-family detached homes are in a homeowners association and can have a small HOA fee for maintenance of lawns and landscaping, for example.