These days, mortgage interest rates have been so low that a lot of people are wondering, “If I were to buy a house, how do I figure out how much my mortgage payments are actually going to be?”
Watch our video or keep reading to find out.
Unfortunately, the formula for figuring out monthly payments is less than simple:
M = P [ i (1+i)^n ] / [ (1+i)^n – 1 ]
You’re better off using an online calculator instead. Go Banking Rates has a very simple mortgage calculator that you can use. You only need to know three things to use this calculator.
1. Enter the total amount you plan to borrow. This should not include the down payment you plan on placing on the property.
2. Enter your interest rate. Enter the APR instead of the straight interest rate, because it’s going to roll in additional expenses such as your brokerage fees, closing costs, property taxes, and give you a more accurate understanding of how much you plan to pay each month.
3. Lastly, enter how many years you want to take to pay it off. Generally people will choose 15 or 30 years.
Go Banking Rates Tip: Keep in mind that your mortgage payment is not the only expense associated with owning a home. Once you buy your house, you’re going to be exposed to a number of new bills you never had as a renter – including things like home maintenance and repair, new utilities like water and trash, and maybe even Homeowners Association dues.
So, while home ownership is a great goal to strive for, make sure that your income truly supports it before you buy.