Mortgage Payment Calculator
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Understanding Your Mortgage Payment
Calculating your monthly mortgage payment is the first step in determining how much house you can afford. This specific Mortgage Payment Calculator breaks down the costs associated with homeownership beyond just the loan repayment.
The 4 Pillars of a Mortgage Payment (PITI)
When lenders look at your ability to pay, they calculate "PITI". Here is what that includes:
- Principal: The portion of your payment that reduces the loan balance.
- Interest: The fee charged by the bank for lending you the money. In the early years of a mortgage, a large percentage of your payment goes toward interest.
- Taxes: Property taxes assessed by your local government, usually collected by the lender in an escrow account.
- Insurance: Homeowners insurance to protect against damage, also typically collected in escrow.
How Interest Rates Impact Affordability
Even a small change in the Interest Rate can significantly impact your monthly payment. For example, on a $300,000 loan, a difference of 1% can change your monthly payment by hundreds of dollars over the life of a 30-year loan.
Don't Forget HOA Fees
If you are buying a condo or a home in a planned community, you likely have to pay Homeowners Association (HOA) fees. These are usually paid directly to the association but must be factored into your monthly budget to ensure you are not overextending your finances.
Why Use This Calculator?
Unlike simple loan calculators, this tool accounts for taxes, insurance, and HOA fees, giving you a realistic view of the check you will write every month. Use this to compare different scenarios, such as 15-year vs. 30-year terms or different down payment amounts.