What Will My Monthly Mortgage Payment Be?

If you are thinking of buying a home, one of the most important questions you need to answer is: what will my monthly mortgage payment be? Your mortgage payment is the amount of money you pay each month to your lender to repay the loan you used to purchase your home. Knowing how much your mortgage payment will be can help you plan your budget, compare different loan options, and decide how much home you can afford.

Beware of search site suggested payments, they are often way off.  You need to use more specific numbers for your calculations.  This post will help you understand how to actually do this.  You can also use your mobile app after you have registered with us and downloaded the app.

But how do you calculate your mortgage payment? What factors affect the amount you pay each month? And how can you lower your mortgage payment and save money in the long run? In this blog post, we will answer these questions and more. We will explain how a mortgage payment is calculated and what it includes. We will also share some tips on how to optimize your mortgage payment and get the best deal possible.

How to Calculate Your Mortgage Payment

Your monthly mortgage payment is made up of four or five parts: principal, interest, taxes, and home owners insurance (and optional mortgage insurance) (PITI). Let’s take a closer look at each of these components and how they affect your payment.

Principal

Principal is the amount of money you borrowed to buy your home, or the amount of the loan that you have not yet repaid. The principal portion of your payment goes towards reducing the balance of your loan. The more principal you pay each month, the faster you will pay off your loan and build equity in your home.

Interest

Interest is the cost you pay to borrow money from your lender, and it usually appears as a percentage of the amount you borrowed. Interest rates are set by your lender based on many factors, such as your credit score, loan term, loan type, down payment, and market conditions. The interest portion of your payment goes towards compensating the lender for lending you the money.

Taxes

Taxes are the fees you pay to the local government for owning a property in their jurisdiction. Property taxes vary depending on where you live, the value of your home, and the tax rate in your area. The tax portion of your payment goes towards funding public services such as schools, roads, parks, and emergency services.

Insurance

Insurance is the coverage you need to protect yourself and your lender from financial losses in case of damage or loss to your home or property. There are two main types of insurance that can factor into your mortgage payment:

• Homeowners insurance: This covers damage or loss to your home and personal belongings due to fire, theft, vandalism, natural disasters, or other hazards. Homeowners insurance also covers liability claims if someone gets injured on your property or if you cause damage to someone else’s property.
• Mortgage insurance: This protects the lender in case you default on your loan. Mortgage insurance is usually required if your down payment is less than 20% of the home’s value. There are different types of mortgage insurance depending on the type of loan you have, such as private mortgage insurance (PMI) for conventional loans or mortgage insurance premium (MIP) for FHA loans.

To calculate your monthly mortgage payment, you need to know the following information:

• The amount of money you borrowed (principal)
• The interest rate on your loan
• The length of your loan term (usually 15 or 30 years)
• The annual property tax rate in your area
• The annual homeowners insurance premium
• The annual mortgage insurance premium (if applicable)

You can use a mortgage calculator like this one¹ to plug in these numbers and get an estimate of your monthly payment. However, keep in mind that this is only an estimate and may not reflect the exact amount you will pay each month. Your actual payment may vary depending on factors such as closing costs, escrow fees, prepayments, discounts, or adjustments.

How to Optimize Your Mortgage Payment

Now that you know how to calculate your mortgage payment and what it includes, you may be wondering how to lower it and save money over time. Here are some tips on how to optimize your mortgage payment and get the best deal possible:

• Shop around for the best interest rate: Interest rates can vary significantly from one lender to another, so it pays to compare different offers and negotiate for the best rate possible. A lower interest rate can reduce your monthly payment and save you thousands of dollars in interest over the life of the loan.  We can help you get the lowest interest rates possible by shopping our 200+ lender network –  NEXA Mortgage the nation’s largest mortgage broker.
• Make a larger down payment: A larger down payment can reduce the amount of money you need to borrow and lower your loan-to-value ratio (LTV), which is the percentage of the home’s value that you owe. A lower LTV can help you qualify for a lower interest rate and avoid paying mortgage insurance, which can save you money each month and overtime.
• Choose a shorter loan term: A shorter loan term means that you will pay off your loan faster and pay less interest overall. For example, a 15-year loan typically has a lower interest rate than a 30-year loan and can save you tens of thousands of dollars in interest. However, a shorter loan term also means that you will have a higher monthly payment, so make sure you can afford it before choosing this option.
• Refinance your loan: Refinancing your loan means that you replace your existing loan with a new one that has better terms, such as a lower interest rate, a shorter loan term, or a different loan type. Refinancing can help you lower your monthly payment, save money on interest, or switch from an adjustable-rate mortgage (ARM) to a fixed-rate mortgage (FRM) or vice versa. However, refinancing also comes with costs and fees, so make sure you do the math and compare the benefits and drawbacks before deciding to refinance.  Ask us about our Mortgage Rate Float Down -Rate Protection Program.
• Make extra payments: Making extra payments towards your principal can help you pay off your loan faster and save money on interest. You can make extra payments as often as you want, such as once a month, once a year, or whenever you have extra cash. You can also use a biweekly payment plan, which means that you pay half of your monthly payment every two weeks instead of once a month. This way, you will make 26 half-payments or 13 full payments per year instead of 12, which can reduce your loan term by several years and save you thousands of dollars in interest.

Let’s get started with building wealth with home ownership

We hope this blog post has helped you understand how to calculate your mortgage payment and what it includes. We also hope that you have learned some tips on how to optimize your mortgage payment and save money in the long run.

If you are ready to buy a home and need a mortgage loan, we are here to help. The Richard Woodward Team NEXA Mortgage is a team of experienced and professional mortgage experts who can help you find the best loan option for your needs and budget. We offer competitive rates, flexible terms, and personalized service to make your home buying process smooth and hassle-free.  Check out our hundreds of Google Reviews here.

Contact us today for a free consultation and quote. We will answer all your questions and guide you through every step of the way. Whether you are a first-time home buyer, a repeat buyer, or a refinancer, we have the right solution for you.

Don’t wait any longer. Your dream home is waiting for you. Let us help you make it happen. Call us at (214) 945-1066 or fill out this form² to get started. We look forward to hearing from you soon!