This is a regular mortgage calculator for fixed-rate mortgage loans and has graphing capabilities. It can also show either monthly or annual amortization schedules according to a loan starting date, so it is also a mortgage amortization calculator. This is also a mortgage calculator with taxes, as well as a mortgage payment calculator, since you can add Homeowners Association or HOA fee, insurance Private Mortgage Insurance or PMI costs, property taxes, and other related costs to approximate your total monthly out-of-pocket cost. You must note that this is a free mortgage calculator, which can calculate how you can refinance. Generally, it is a refinance mortgage calculator.
A mortgage is a loan secured through typically a real estate property. A real estate mortgage has the following fundamental components:
Loan Amount – the amount you borrow from any lender (e.g., bank). The borrowed loan amount is correlated typically to your household affordability or income. To approximate the amount you can afford, you can use a House Affordability Calculator.
Downpayment – a percentage of the total amount of the loan, to be paid first. In the United States, if the downpayment is less than 20% of the total property price, typically a PMI must be bought until the principal becomes less than 80% of the total property price. The PMI rate is regularly between 0.3% and 1.5%, usually 1%, of the total loan amount, reliant on different factors. In addition, banks typically will not provide you with a good interest rate if your downpayment is less than 20%.
Loan Terms – the length of time you have to repay the loan. The regular loan terms in the United States vary from 5 years, 10 years, 15 years, 20 years, 30 years, and so forth. Typically, with shorter loan terms, you have lower interest rates.
Interest Rate – can be a fixed-rate mortgage or FRM or an adjustable rate mortgage or ARM. With ARMs, the interest rate is typically fixed for a set period of time. Afterwards, it will periodically adjust, according to market indices. An ARM usually moves part of the risk to the borrower. Hence, the initial interest rate is typically 0.5% to 2% lower than a 30-year fixed rate. Interest rates in terms of mortgage are usually expressed as an Annual Percentage Rate or APR, which is sometimes called effective APR or nominal APR. It is the rate shown as the periodic interest rate multiplied by the number of compounding periods in a year. Case in point, if your mortgage rate is 6% APR, it indicates that you have to pay 6% divided by 12 months, which is equal to 0.5% interest each month. Typically, the transaction cost and fees are taken into consideration when computing for APR.
Repayment – the most usually way to repay a mortgage loan is to do monthly, fixed payments to the lender. The payment consists of the principal and interest. For a 30-year loan, for instance, the majority of the payments you accomplish in the first few years will cover the interest.
The costs incurred in owning a home is not just the monthly payments or mortgage. When you plan to buy a home, you should also take into consideration other necessities and extras. Found below is the list of possible costs:
Property Taxes – a tax that the property owner pays to a governing authority. In the United States, property tax is typically managed by the county or municipal government. The yearly real estate tax in the United States depends on the location, but this normally ranges between 0% to 4% of the property value. In really extreme instances, the tax rate can be as high as 10% or even higher.
Home Insurance – an insurance policy also called homeowner’s insurance that protects the owner from accidents that may occur to their private residence or other real estate properties. A home insurance policy in the United States also has personal liability coverage that safeguards against lawsuits involving injuries that happen on and off the property. Home insurance is needed by most lenders. The cost of home insurance depends on the location, property conditions, coverage amount, etc. Usually the annual cost ranges from 0.1% to 5% of the property value.
PMI – an insurance policy that protects the mortgage lender if the borrower is unable to repay. In the United States, if the downpayment is less than 20% of the property value, the lender normally needs the borrower to purchase PMI until the loan-to-value ratio or LTV reaches 80%. PMI price differs per downpayment amount, the size of the loan, the credit of the borrower, etc. The annual cost usually ranges from 0.3% to 1.5% of the loan amount.
HOA Fee – a fee placed on the property owner by the HOA. The HOA is an organization that assists in maintaining and improving property and environment in the same area. Condominiums and townhouses usually have a HOA. It may also be in a single-family community. The HOA fee usually ranges from a few hundreds to a few thousand dollars each year in the United States.
Other Costs – includes home maintenance costs, utilities, etc. Maintenance costs and utilities can be costly. It is not unusual to spend 1% of your total property value for home repairs every year. Moreover, it is typical to spend more than $500 each month in heating during winter in New York for a 2,000 square foot house.
Closing Cost – fees paid when closing a real estate transaction. Although it is not a recurring fee, it can be costly. In the United States, this can include appraisal fees, attorneys fee, brokerage commission, home warranties, inspection fees, mortgage application fees, points, pre-paid home insurance, pro-rata homeowner association dues, pro-rata interest, pro-rata property taxes, property transfer tax, recording fees, survey fee, title service cost, etc. These fees will be applied depending on your particular situation, as the seller will share some of the cost. Nonetheless, it is usual to pay a $10,000 closing cost on a $300,000 transaction for a buyer.