Figuring out your mortgage monthly payments is crucial in order to plan your financial situation for the next few years. However, this can be easier said than done, as it requires you to work through a bunch of mathematical equations for you to come up with that magic number. Still, there are ways to make knowing your fees much simpler; such as using a mortgage calculator. If you’d like to learn how to use one, continue reading!
How to Use a Mortgage Calculator
When you first enter the page linked above, you’ll notice 7 different labels and blank spaces next to them divided into two sections. The first four are for you to fill in with your information; the last three are generated automatically as you put the data in. This is what each means:
Here you need to enter the amount of money that’s being asked for the property that you want to acquire. For this example, let’s make the home price $250,000.
This is the amount of money (usually cash from your own pocket) that you’ll be giving upfront for the property. It’s common to pay at least 20% of the home price as a down payment. E.g.: $60k.
Annual Interest Rate
This will depend on your loan officer and on the agreement you reach with them. This number represents the percentage rate for every year you have the mortgage, for example, 5%.
Number of Years
This, again, will vary from case to case. As its name states, it represents the number of years that you’ll have to pay your mortgage off. For this example, let’s say it’s 25 years.
This number is generated automatically and it’s the result of subtracting the down payment from the home price to come up with how much your loan will be. In this case, it’s $190,000.
Number of Payments
This number is obtained by multiplying the months in a year (12) times the number of years you agreed to pay your loan in (25). In this example, you’ll have to make 300 payments.
Monthly Principal and Interest
Lastly, next to this label you’ll find your monthly mortgage fees. This is the amount you’ll have to pay each month to pay off your loan in the amount of years agreed upon and with the interest rate applied to it. With the information discussed in this post, the monthly fee is $1,110.72.
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If you’re thinking about buying a house, remember to contact Thompson Law Group, PC & Home Key Title & Closing, Inc. in Westborough for your title services needs. Call to learn more about how they can help you have a successful and safe transaction.