What is a Mortgage Calculator?
A mortgage payment calculator will help you determine the cost of homeownership at today's mortgage rates, accounting for principal, interest, taxes, homeowners insurance, and, where applicable, condominium association fees. The mortgage calculator's default values, including mortgage rate and length of the loan, can be easily adjusted to reflect your current situation. You can use the mortgage payment calculator to find the monthly mortgage payment, current mortgage rates, and a specific home purchase price.
Mortgage Payment Calculator Terms To Know.
Home price is the dollar amount for which the home can be purchased. This is not the same as “listing price,” which is the amount for which the home is listed for sale. Home price does not include closing costs and loan fees. It’s the contractually-agreed upon price for a home.
Your interest rate is the rate at which you will repay the bank for your mortgage. Interest rates are expressed in annual terms. With fixed-rate mortgages, your mortgage interest rate will remain unchanged for the life of the loan. With an adjustable-rate mortgage, your interest rate may change after a fixed number of years. When using this home mortgage calculator, use today’s mortgage rate for “interest rate.”
Sometimes known as “loan term,” the loan's length is the number of years until the loan is paid-in-full. Most mortgages have a loan term of 30 years. Since 2010, the 20-year and 15-year fixed-rate mortgage have been increasingly common. The monthly cost of a mortgage is higher with a shorter-term loan, but less mortgage interest is paid overtime. A 15-year mortgage will pay approximately 65% less mortgage interest than a homeowner with a 30-year loan.
A down payment is the amount of equity that you put into the house at the purchase time. For example, if you buy a home for $100,000 and make a $5,000 downpayment, you will have $5,000 equity (5%) in your new home. Some mortgage programs, such as the FHA loan, require a 3.5% downpayment, while others, including the VA loan and USDA loan, require no downpayment whatsoever. Your downpayment may not be the only cash required at closing, so be sure to budget for closing costs and other items.
Homeowners insurance is an insurance policy against your home, which protects against a minor, major, and catastrophic losses. Sometimes called “hazard insurance,” all homeowners are required to carry such protection. Laws vary by state, but, as a general rule, your homeowner's insurance policy must be in an amount that covers the cost to rebuild your home as-is. Homeowners' insurance costs vary by zip code and insurer. Homeowners insurance should not be confused with private mortgage insurance, which is something else entirely. Along with property taxes, homeowners' insurance can be paid in equal installments along with your monthly mortgage payment. This arrangement is known as “escrowing” your taxes and insurance.
Property taxes are taxes assessed on a home and paid to your state, city, and/or local government(s). Property taxes can range in cost from one-half percent of your home’s value to two percent of its value or more on an annual basis. Sometimes called “real estate taxes,” property taxes are typically billed twice annually. Along with homeowners' insurance, property taxes can be paid in equal installments along with your monthly mortgage payment. This arrangement is known as “escrowing” your taxes and insurance.
Homeowners Association dues are typically paid by condominium owners and homeowners in a planned urban development (PUD) or townhome. HOA dues are paid monthly, semi-annually, or annually, paid separately to a management company or governing body for the association. HOA dues cover common services for tenants and residents. These services may include landscaping, elevator maintenance, maintenance and upkeep, and legal costs. Homeowners association dues vary by building and neighborhood.
Mortgage insurance is a monthly payment that is paid by the homeowner for the benefit of the lender. Mortgage insurance “pays out” when a loan goes into default. Payments are made to the lender. Mortgage insurance is required for conventional loans via Fannie Mae and Freddie Mac for which the downpayment is twenty percent or less. This type of mortgage insurance is known as Private Mortgage Insurance (PMI). Other loan types require mortgage insurance, too, including USDA loans and FHA loans. With FHA loans and USDA loans, mortgage insurance is called Mortgage Insurance Premiums (MIP). Mortgage insurance is sometimes paid upfront (UFMIP) or as a single-premium; and is sometimes lender-paid (LPMI).