Whether you are a first time homeowner or a seasoned veteran, one of the biggest headaches of purchasing a new house can be calculating your mortgage, making sure you pay it properly, consistently, and on time. Luckily for you, you’ve just stumbled upon 3 simple ways to calculate your new mortgage!
Nowadays with a simple internet search, there are plenty of online mortgage calculators available. Many of them are even free of charge. The thing to remember when using these types of calculators is that they will not always be completely accurate.
They will however give you a rough estimate of what your mortgage will come out to be, which may be all you need. Just don’t go placing any bets on them!
Doing the Math
If you don’t trust an online calculator to do the math for you, you can take a little extra time to do it yourself. Luckily the math involved in calculating a mortgage is actually pretty simple.
One of the first things you need to know about is PITI, which stands for: Principle (the amount you borrowed and how much of that you’re scheduled to pay off each month), Interest (how much it costs to use your loan), Taxes (referring to the property taxes), and Insurance (the amount of the loan that goes towards fire/hazard insurance).
Essentially, for every $100,000 you borrow, your monthly mortgage payment, or PITI, will be very close to $725. You can also add half of $750 to calculate for an extra $50,000 borrowed. Do that math on your exact borrowed amount and you should come pretty close to what your mortgage will be.
Hire a Professional
Of course, if you don’t mind spending a little extra and don’t really care sharing this type of personal information, you can hire a professional to calculate your monthly mortgage payment for you.
Most real estate agents and brokers should be able to help you out and give you a very close estimate. Keep in mind though that they will likely use the simple formula above or something very similar, so you may opt to just save the money and do it yourself.
Overall, buying a new house is a very exciting endeavor, but it doesn’t come without a bit of work and stress. If you know what your income is, it should be pretty easy for you to recognize whether or not you’ll be able to afford your mortgage.
If you’ve calculated it are worried it may be too much, but you have extra money in savings, you can lower your mortgage by increasing your down payment. Either way, congratulations and good luck!