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Tuesday, October 29, 2013

Mortgage 101: How do I know what my mortgage payment will be?

So you're interested in buying a home but you don't exactly know where to start.  You get pre-approved to
purchase up to $250,000 but you want to know exactly what your payment will be.  Well, there are a few factors to consider when trying to calculate your mortgage payment that I will discuss more below:

The first is the sales price of the home.  Obviously the higher the sales price, the higher your payment and vice versa.  Just because you are pre-approved to buy a very expensive home, does not mean the payment will always work with your budget.  A good tool to use is our Rent vs Buy calculator, which lets you compare how much money you would save buying a home over renting one.

The second factor to consider is the amount of money you are going to put down on the home.  Depending on whether you go with an FHA or Conventional loan, the amount of money required to put down varies.  Your loan officer should be able to advise you on the best loan program for you and can let you know about the different requirements on down payments.

Keep in mind that when applying for a USDA or VA loan, there is zero down payment.  However, your loan amount begins higher than it would on a standard FHA loan as all of the loan fees are financed directly into the loan.  This can be a good or bad thing as you get to purchase a home with no money down but your payment will be slightly higher to balance out the difference in your loan amount.

Next, you will want to consider what is your desired loan term? Do you plan to be in your house for 30 years? Or would you rather have it paid off in 15 in order to save for retirement? There are loan terms available to fix almost any unique financial situation that range anywhere from a 10 to 30-year fix.

Finally, you'll need to factor in your interest rate.  You can check the daily interest rate on our website and also compare our rates with competitors.  Rate's can change significantly within a few days or weeks.  Be sure to follow up with your loan officer and find out where current market rates are.  If they are low, you'll want to lock-in that interest rate and close the deal fast.

Once you've determined each of the above factors, you can simply plug all the numbers into our mortgage calculator.  Our calculator factors in all of the above characteristics as well as PMI (Private Mortgage Insurance) for loans where less than 20% is put as a down payment.  Also, taken into consideration are the town property taxes and their effect on the total monthly mortgage payment.

If you have any further questions about mortgage payments, interest rates, or loan terms and programs please contact us at 800.461.4152 or you can fill out an online application and one of our licensed loan officers will contact you shortly.  

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