Mortgage Calculator

Beware of online mortgage calculators because they may not give you the full story.  Most buyers these days are researching mortgage information online before they ever speak to a mortgage lender to become educated and ready to handle this huge purchase.  Many of these buyers are searching for mortgage calculators online to help them to determine how much they can afford and what the payment might be at particular purchase prices or interest rates.

Most mortgage calculators online do not show the full payment you would be required to pay and the payment that mortgage lenders use to qualify you.  A typical mortgage calculator will only show the Principal and Interest portion of the payment and does not include the taxes, homeowners insurance, mortgage insurance or HOA, otherwise known as Principal, Interest, Taxes and Insurance (PITI).

Mortgage calculators are a great way to help you in calculating the payment, but you should add in a few other items, to make sure you fully understand the payment your lender will be using in their calculations and the payment you will be making each month.

• Principal and Interest – use calculators you find online such as the one on 1st Priority Home Loans
  • Other calculators exist to help determine how soon you could pay off your mortgage if you pay additional principal, rent vs. buy calculators.  Some sites even include mortgage qualifying calculators.
• Taxes – this includes your property taxes and can be found through public records by searching for county assessors public records search in the county you are looking to buy.  Take the yearly tax amount and divide by 12 to determine the monthly amount you should add to P&I for the tax portion of your PITI payment.
• Insurance – shop around for homeowners insurance.  A good place I recommend you start is with your current auto insurance policy company.  They can provide a quote and maybe even offer a discount due to multiple policies.
• Mortgage Insurance – if you plan to put less than 20% down, you may have mortgage insurance as a part of your payment, too.  Check with your mortgage lender to discuss what this amount may be for you.
• HOA – depending on the property you purchase, you may have an HOA payment to make.  Although this payment will not be included in your payment to the mortgage company, it is a payment that is calculated into your qualifications by your mortgage lender.

Use mortgage calculators, but understand the payment they provide and realize that there are other items that will be included in your monthly mortgage payment.

Lending a hand,

Scott Wynn