Mortgage Calculator
Understanding Your Mortgage Payment: The Key to Growing Your Real Estate Portfolio
Whether you're just starting out or you're expanding your real estate portfolio, understanding how to calculate a mortgage payment is crucial for making informed business decisions.
Your mortgage payment encompasses more than just the loan amount for your property. It includes variable and fixed monthly expenses such as interest, taxes, and insurance. Let's dive deeper into each component.
The total cost of the home you are planning to buy. This includes the purchase price agreed upon with the seller, excluding any down payments or closing costs. Enter the full amount here to calculate your mortgage payments. If your down payment is less than 20%, lenders typically require private mortgage insurance (PMI) to protect themselves in case of default. This insurance is an added cost for borrowers with a loan exceeding 80% of the property value. There are many factors that effect the amount of the PMI, but you can expect to pay between $30 and $150 per month for every $100,000 you borrow. To avoid PMI, aim for a down payment of at least 20% down, a common requirement for most loan programs.Interest is the cost of borrowing money. While you pay an annual interest rate, your payments are calculated monthly. Typically, interest rates on investment properties are higher due to increased risk. Initially, a larger portion of your payment goes towards interest, but over time, as you pay down the principal, the interest portion decreases. Shopping around for the best loan program can lead to significant interest savings. Property taxes are a mandatory part of homeownership and significantly impact your mortgage payment. You can either include one-twelfth of your annual tax bill in your monthly mortgage payment through an escrow account or pay the taxes directly. Regardless, it’s essential to factor in property taxes to stay on top of your financial obligations.
For our purposes, enter the estimated Annual Property Tax amount and we'll break it down in your monthly payment for you. Lenders mandate homeowners insurance to protect the property against potential losses. Most lenders require coverage equal to 100% of the replacement cost, ensuring you can rebuild the property in the event of a total loss.
