Tuesday, September 3, 2024

# How To Determine My Mortgage Payment

## Calculate Your Monthly Payment By Hand

Mortgage Payments Explained: How to calculate my monthly mortgage payment

You can calculate your monthly mortgage payment, not including taxes and insurance, using the following equation:

M = P /

P = principal loan amount

i = monthly interest rate

n = number of months required to repay the loan

Once you calculate M , you can add in the monthly property tax and homeowners insurance premium, if you have them. These are fixed costs that aren’t determined by how much you borrow from the bank, so they can easily be added to the monthly cost.

## Payoff In 14 Years And 4 Months

The remaining term of the loan is 24 years and 4 months. By paying extra \$500.00 per month, the loan will be paid off in 14 years and 4 months. It is 10 years earlier. This results in savings of \$94,554.73 in interest.

If Pay Extra \$500.00 per month

 Remaining Term 14 years and 4 months Total Payments
 24 years and 4 months Total Payments

The Mortgage Payoff Calculator above helps evaluate the different mortgage payoff options, including making one-time or periodic extra payments, biweekly repayments, or paying off the mortgage in full. It calculates the remaining time to pay off, the difference in payoff time, and interest savings for different payoff options.

## More On Mortgage Repayments

You can find out more about the costs of borrowing and repaying your loan in our guides to managing your mortgage payments and the different types of mortgage.

If you want to make sure you’re doing everything you can to get a mortgage, see our guide to improving your mortgage chances.

Or if you want to do some more calculations, try these:

Browse our full list of mortgage calculators for more help crunching the numbers.

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## How Much Interest Do You Pay

Your mortgage payment is important, but you also need to know how much of it gets applied to interest each month. A portion of each monthly payment goes toward your interest cost, and the remainder pays down your loan balance. Note that you might also have taxes and insurance included in your monthly payment, but those are separate from your loan calculations.

An amortization table can show youmonth-by-monthexactly what happens with each payment. You can create amortization tables by hand, or use a free online calculator and spreadsheet to do the job for you. Take a look at how much total interest you pay over the life of your loan. With that information, you can decide whether you want to save money by:

• Borrowing less
• Paying extra each month
• Finding a lower interest rate
• Choosing a shorter-term loan to speed up your debt repayment

Shorter-term loans like 15-year mortgages often have lower rates than 30-year loans. Although you would have a bigger monthly payment with a 15-year mortgage, you would spend less on interest.

## What Are The Most Common Reasons To Refinance A Mortgage

• To lock in a lower interest rate and lower their monthly payments. Homeowners who have improved their credit score or lowered their debt-to-income ratio, for example, might be eligible for a better rate today if they refinance.
• To switch from an adjustable-rate mortgage, or ARM, to a fixed-rate loan. Borrowers who took out an ARM but plan to stay in their homes may want to refinance into a more stable, fixed-rate loan before the ARM resets to a variable rate and payments become unaffordable.
• To pull out cash from their homes equity. A cash-out refinance lets you tap your homes equity by replacing your existing mortgage with a new one for a larger loan amount, withdrawing the difference in cash.
• To remove a borrower from the mortgage.Divorce is another reason to refinance in order to get one spouses name off the loan. This might also apply if you bought a home with another relative or friend. The person who is refinancing the loan into his or her name will have to qualify for the new loan solely with their own income, credit and employment. Dont forget that removing someone from a mortgage doesnt remove them from the deed of the home, which may require filing a legal document called a quitclaim deed .
• To get rid of FHA mortgage insurance. For borrowers with a loan insured by the Federal Housing Administration, known as FHA loans, refinancing into a conventional mortgage can eliminate annual mortgage premium payments once youve reached 20 percent equity in your home.
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## Example: Costs When You Break Your Mortgage Contract To Change Lenders

Suppose a different lender is offering you 3.75% interest. To break your mortgage contract with your current lender youll need to pay a prepayment penalty of \$6,000.

You may also choose a blend-and-extend option with your current lender. This would give you a 4.6% interest rate.

Table 2: Example of costs to change lenders

Costs
\$40,350 \$38,005

In this example, you pay less when you choose a blend-and-extend option with your current lender.

Note that youll usually need to pay fees when you set up a new mortgage, including when you choose a blend-and-extend option. This example doesnt take into account any fees. Lenders may be willing to pay some or all of the fees. If this is the case, your costs to renegotiate your mortgage will be less.

## How To Use The Mortgage Payment Calculator

To use the calculator, start by entering the purchase price, then select an amortization period and mortgage rate. The calculator shows the best rates available in your province, but you can also add a different rate. The calculator will now show you what your mortgage payments will be.

Our calculator also shows you what the land transfer tax will be, and approximately how much cash youll need for closing costs. You can also use the calculator to estimate your total monthly expenses, see what your payments would be if mortgage rates go up, and show what your outstanding balance will be over time.

If youre buying a new home, its a good idea to use the calculator to determine what you can afford before you start looking at real estate listings. If youre renewing or refinancing and know the total amount of the mortgage, use the Renewal or Refinance tab to estimate mortgage payments without accounting for a down payment.

Recommended Reading: Can You Get A Mortgage To Buy A Foreclosed Home

## Consider The Cost Of Property Taxes

A monthly mortgage payment will often include property taxes, which are collected by the lender and then put into a specific account, commonly called an escrow or impound account. At the end of the year, the taxes are paid to the government on the homeowners’ behalf.

How much you owe in property taxes will depend on local tax rates and the value of the home. Just like income taxes, the amount the lender estimates the homeowner will need to pay could be more or less than the actual amount owed, which could result in a bill or a refund come tax season.

You can typically find your property tax rate on your local government’s website.

## How To Calculate Your Monthly Mortgage Payment

How to calculate my mortgage payment

You can calculate your monthly mortgage payments using the following formula:

M = P /

In order to find your monthly payment amount “M,” you need to plug in the following three numbers from your loan:

• P = Principal amount
• I = Interest rate on the mortgage
• N = Number of periods

A good way to remember the inputs for this formula is the acronym PIN, which you need to “unlock” your monthly payment amount. If you know your principal, interest rate and number of periods, you can calculate both the monthly mortgage payment and the total cost of the loan. Note that the formula only gives you the monthly costs of principal and interest, so you’ll need to add other expenses like taxes and insurance afterward.

Also keep in mind that most lender quotes provide rates and term information in annual terms. Since the goal of this formula is to calculate the monthly payment amount, the interest rate “I” and the number of periods “N” must be converted into a monthly format. This means that you must convert your variables through the following steps:

• Subtract your down payment amount from the home price to find the total borrowed “P”
• Divide your quoted annual interest rate by 12 to get your monthly interest rate “I”
• Multiply the number of years in your mortgage term by 12 to find the total number of monthly payments you will be making “N” be careful not to confuse this with what the monthly payments will be, aka “M,” which we will calculate later on
• #### Example

N = 30 years X 12 months = 360

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## Calculations For Different Loans

The calculation you use depends on the type of loan you have. Most home loans are standard fixed-rate loans. For example, standard 30-year or 15-year mortgages keep the same interest rate and monthly payment for their duration.

For these fixed loans, use the formula below to calculate the payment. Note that the carat indicates that youre raising a number to the power indicated after the carat.

Payment = P x x ^n] / ^n – 1

## Refinance To A Shorter Term

Another option involves refinancing, or taking out a new mortgage to pay off an old loan. For example, a borrower holds a mortgage at a 5% interest rate with \$200,000 and 20 years remaining. If this borrower can refinance to a new 20-year loan with the same principal at a 4% interest rate, the monthly payment will drop \$107.95 from \$1,319.91 to \$1,211.96 per month. The total savings in interest will come out to \$25,908.20 over the lifetime of the loan.

Borrowers can refinance to a shorter or longer term. Shorter-term loans often include lower interest rates. However, they will usually need to pay closing costs and fees to refinance. Borrowers should run a compressive evaluation to decide if refinancing is financially beneficial. To evaluate refinancing options, visit our Refinance Calculator.

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## Bettercom Best Online Lender

Better.com, also known as Better Mortgage, is an online mortgage lender, ranked one of Bankrates best mortgage lenders overall and best online lenders, and available in the majority of states in the U.S.

Strengths: With Better.com, you can get rate quotes in seconds and preapproved for a 15-year or other type of mortgage in as little as three minutes. Its proprietary technology speeds up the process for borrowers and automatically applies discounts, if available, to maximize your savings on a 15-year loan. The lender doesnt charge any fees, either.

Weaknesses: Better.com doesnt offer VA or USDA loans, and doesnt have branch locations, which can be a downside if youd rather meet with a loan officer in-person.

## Getting Started With Calculating Your Mortgage

People tend to focus on the monthly payment, but there are other important features that you can use to analyze your mortgage, such as:

• Comparing the monthly payment for several different home loans
• Figuring how much you pay in interest monthly, and over the life of the loan
• Tallying how much you actually pay off over the life of the loan, versus the principal borrowed, to see how much you actually paid extra

Use the mortgage calculator below to get a sense of what your monthly mortgage payment could end up being,

Read Also: How To Market Yourself As A Mortgage Loan Officer

## How To Lower Your Mortgage Payment

If youre finding it difficult to make your monthly mortgage payments, or if youre simply looking to lower your recurring household costs, there are several options to explore to bring down your monthly mortgage amount. Use nestos Mortgage Payment Calculator to see what your payment would be in different scenarios as you consider the following:

• Extending the duration of your mortgage term
• Making a larger down payment
• Finding a lower mortgage rate
• Renting out part of your home to offset your mortgage costs
• Refinancing your mortgage at a lower interest rate
• Downsizing to a smaller, less expensive home

Tip: If youre finding it difficult to make your monthly mortgage payments, or if youre simply looking to lower your recurring household costs, there are several options to explore to bring down your monthly mortgage amount

## How To Lower Your Mortgage Payments

There are a few ways to lower your monthly mortgage payments. You can reduce the purchase price, make a bigger down payment, extend the amortization period, or find a lower mortgage rate. Use the calculator to see what your payment would be in different scenarios.

Keep in mind that if your down payment is less than 20%, your maximum amortization period is 25 years. As for finding a lower mortgage rate, its a good idea to speak to a mortgage broker for assistance.

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## The Three Numbers You’ll Need

There are several factors that go into estimating how much your regular mortgage payments will be. These 3 numbers are particularly important:

1. The total mortgage amount: This is the price of your new home, less the down payment, plus mortgage insurance, if applicable.

2. The amortization period: This is the total life of your mortgage, and the number of years the mortgage payments will be spread across.

3. The mortgage rate: This is the rate of interest you pay on your mortgage.

## Simple Mortgage Payment Calculator

How to Calculate Your Mortgage Payment

There are numerous simple mortgage payment calculators in Texas. Some may be specific, while others are more generic!

The most accurate simple mortgage payment calculator is the one, which gives you results based on the lenders point of view.

The intention to use a simple mortgage payment calculator is to anticipate your mortgage payments when you are refinancing or buying a new house. You might feel the need to see if your payments fit your monthly expenses.

Let us understand a few tips on how to use a Simple Mortgage Payment Calculator in Texas to its best.

## Why Down Payments Are Good For Homebuyers

If youve never owned a home, saving for a down payment provides good practice for homeownership.

Suppose you currently rent a house for \$800 per month, and the payment for the home you want to buy would be \$1,200 per month. You can practice for homeownership by putting the \$400 difference into savings. This accomplishes three things:

• Your down payment savings grows.
• You get used to having less spending money.
• You may avoid an expensive mistake if you realize that you cant handle the larger payment.

Many financial experts agree that having a down payment is a good sign that youre ready for homeownership. If you can make the necessary sacrifices to amass a down payment, then youll likely be able to manage expenses that come with owning a house, including monthly mortgage payments, maintenance costs and property taxes.

## Creating An Amortization Schedule

• 1Set up your amortization schedule. An amortization schedule will tell you exactly how your monthly mortgage payments will be split between paying off principal and interest and what your balance will be at the end of each month. Start by inputting the basics of your loan information in the top left of a spreadsheet program. For example, in cell A1, write out “annual interest rate.” Then, input your annual interest rate as a percentage in the next cell over, B1. Continue down to cell A2 for the loan duration in years, inputting the amount in column B as before. Do the same for payment per year and loan principal in cells A3 and A4, respectively.XResearch source
• 2Create your amortization schedule columns. Skip a line under your loan information. Then, place the following words across the spreadsheet, in row 6 from columns A to E:
• Payment number.
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## Finding The Right And Simple Mortgage Calculator

It is imperative to know if you have the right simple mortgage payment calculator In Texas based on what you are using it for.

Are you looking for a Rate and Term Refinance, a Cash-out Refinance, or a new Property Purchase, the type of calculator you might want to use for payment calculation would vary.

For example, if you are looking to buy a new home, the simple mortgage payment calculator may also include mortgage insurance if you are putting down lower than twenty percent as a down payment.

## Cardinal Financial Company Best For Low

Cardinal Financial Company, which also does business as Sebonic Financial, makes mortgages in all 50 states, including both fixed- and adjustable-rate loans ranging from 10- to 30-year terms.

Strengths: Cardinal Financial has closed loans in as few as seven days , and can accept credit scores as low as 620 for a conventional loan, 580 for an FHA or USDA loan, 550 for a VA loan and 660 for a jumbo loan. This can be ideal if your credit needs some work.

Weaknesses: If youre hoping to compare Cardinal Financials 15-year mortgage rates with those of other lenders, youll have to contact the lender directly this information isnt listed on its website.

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