House Payment Calculator

How does this house payment calculator work?

This is a comprehensive calculator designed to help you determine the total monthly effort you will have to make to payout your mortgage and your own house related costs, thus it requires knowing the following details:

• House price meaning the value you will pay for the property you buy.
• Down payment which is the amount of money you have available for a one time deposit at the beginning of the real estate transaction. While the level required depends on the lender’s policy, it usually varies between 15 to 30% (most used level is 20%).
• Term of the loan usually expressed in years or months. Most of the home mortgages are taken for a period which varies between 15 and 30 years, while the most common term is 25 years.
• A constant interest rate level the lender offers.
• A desired payment frequency which most probably will be monthly, but can be any value from the provided drop down list.
• Annual property tax rate which is by default estimated to 1.2% but it is editable, so whenever the case it can be changed to any level.
• Annual home insurance value you assume you will pay. For that you may contact a specialized broker and as for a quote for a similar property.
• Annual PMI insurance rate which is automatically estimated by considering the values you input within the previous fields, but it is changeable with any percentage.
• Annual HOA dues where applicable.
• Other costs related to the home purchase.

The algorithm behind this house payment calculator applies the standard compound interest formula, while returning all the relevant information that consists in the figures presented below, plus a detailed amortization schedule:

■ Monthly payment value paid periodically.
■ Monthly property tax amount.
■ Monthly home insurance cost.
■ Monthly PMI insurance value.
■ Monthly HOA dues/fees figure.
■ Other monthly fees & costs.
■ Monthly total out of pocket (the sum of all the above items).
■ House price given.
■ Loan amount borrowed calculated by subtracting the down payment form the house price.
■ Down payment.
■ Total paid for the loan.
■ Total interest paid.
■ Loan term in months.
■ Annual interest rate expected.
■ Desired payment frequency.
■ Payoff date.

Example of a calculation

In case of a house assessed to value $250,000, if an individual has put aside for a down payment a value of $60,000, while analyzing the possibility to take a loan over 25 years with a fixed interest percentage of 3.75%, with monthly payments. The other variables known are:

- annual property tax rate is 1.3%;

- annual home insurance cost is $1,500;

- yearly PMI cost is 0.4%;

- yearly HOA dues is $1,200 while other related costs equal $2,500. Which will be the total out of pocket?

House payment results:

■ Monthly payment (principal + interest): $976.85
■ Monthly property tax: $270.83
■ Monthly home insurance: $125.00
■ Monthly PMI insurance: $83.33
■ Monthly HOA dues/fees: $100.00
■ Other monthly fees & costs: $208.33
■ Monthly total out of pocket: $1,764.35
■ House price: $250,000.00
■ Loan amount borrowed: $190,000.00
■ Down payment: $60,000.00
■ Total paid: $293,054.78
■ Total interest paid: $103,054.78
■ Loan term: 300 months
■ Annual interest rate: 3.75%
■ Payment frequency: Monthly
■ Estimated payoff date: January, 2040

How to estimate the total effort on your house payments

Many people looking to purchase their own home through a mortgage loan get surprised by the total effort they should be making on a regular basis mainly because they do not acknowledge all the aspects involved. Thus to make an exact estimation on the total expenses level, you will have to analyze at least four aspects :

A) The down payment you will have to deposit;

B) The closing costs you will have to pay at the beginning of the agreement, as they will temporarily affect you financial stability. Even though is a onetime effort it may negatively impact you current expenses level. This is a large list, thus a few examples you may be requested to pay are: discount points fee, lawyers fee, appraisal fee, loan origination fee, credit report cost, processing fee or title search & title insurance.

C) The loan amount borrowed and the interest you will pay for it, meaning that you will need to know how much you will pay during the repayment schedule. In a safety analysis approach of this aspect you should consider a margin of an increase with 5% of your costs as the interest is volatile over time;

D) The costs you will have to pay as a result you will own the house. For instance the state’s property taxes, home insurance costs, maintenance costs and any similar charges.

What to avoid in a mortgage loan ...

The dream of a perfect home may stop you from aknowledging things that may later destabilize your life. So here's a short list what to avoid when buying your own house with money borrowed:

• ... taking more money than you can actually afford to pay. It is normal to desire a fancy house but borrowing within your financial capabilities is recommended.
• ... overestimating your monthly income level.
• ... taking a loan by assuming your income will increase year per year.
• ... borrowing money when the interest rate is at its maximum.
• ... underestimating your monthly expenses.
• ... ignoring your future family's needs such as college tuition, study finance programs, health insurances.