Calculating a Mortgage Payment? Use a Mortgage Calculator with Taxes and Insurance

Before you start searching for a home, it’s important to understand how much you can afford. A mortgage calculator with taxes and insurance factored in, can be a helpful and accurate tool to estimate your monthly payments.

The Costs Included in a Monthly Mortgage Payment

Monthly mortgage payments include several coststhe principal, interest, taxes, and insurance (PITI).

  • Principal. The amount of money you borrow is called the principal. The way mortgage loans are structured, the amount of principal you pay each month starts low (with more of your payment going to other costs, such as interest) and increases over the lifetime of your loan.
  • Interest. Interest is the cost of borrowing the money. In the early months of your loan, the majority of your monthly payment will go toward interest. As your mortgage ages, more of your monthly payment will be applied to the principal. In a traditional 30-year mortgage, the point where the balance shifts is around the 15-year mark.
  • Taxes. Local governments collect property taxes and use them to help fund projects that serve the community, such as emergency services, schools, or necessary road improvements. Your property tax is often included in your monthly mortgage payment. In this case, your lender will collect the payments on your behalf and hold them in escrow until it is time to pay your property taxes.
  • Insurance. Your monthly mortgage payment may also include insurance if your lender requires it — this includes home insurance and private mortgage insurance (PMI). Home insurance covers your home and protects you against disasters, including fire, theft, natural disasters, personal liability claims, and more. Private mortgage insurance is usually required if you take out a conventional mortgage and put down less than 20% of the home’s sale price as a down payment.

A mortgage calculator with taxes and insurance is a tool that you can use to easily input variables to give you an estimate of the monthly mortgage payment you can expect.

When to Use a Mortgage Calculator

You can use a mortgage calculator at nearly any stage of your home buying process. If you are just getting started in your home search, it can help you set a budget for your purchase. First, decide on an amount that you can comfortably pay each month for your home. Next, estimate how much you can apply to the principal and interest by subtracting rough estimates for taxes, home insurance, PMI, and homeowner’s association fees (if applicable).
Research average interest rates to know what you can expect to pay in interest based on your credit score. This will help ensure that your mortgage calculator results are accurate for your situation.
If you’ve already begun looking at specific homes in your search, you can plug in the relevant information for your favorite homes to help you calculate your estimated monthly mortgage payments. Remember to make sure that you’re inputting all of the information you have to get a better idea of exactly how much the home would cost each month.

How Will a Mortgage Calculator with Taxes and Insurance Help Me?

If you are considering financing a home, a mortgage calculator with taxes and insurance can be a great tool.

  • It helps you estimate your monthly mortgage payment with accuracy. A mortgage calculator with taxes and insurance will let you see what your monthly mortgage payment will look like. This is an essential early step in the process of shopping for a new home.
  • It helps you factor in often overlooked costs of buying a home. In addition to principal and interest expenses, a mortgage calculator with taxes and insurance takes into account expenses that can easily be overlooked. Knowing what these costs are, and how they affect your monthly mortgage payment, can help you accurately determine a home price that will realistically fit your budget.
  • It helps you to narrow your home search. A mortgage calculator with taxes and insurance will help you narrow your home search, allowing you to filter out homes that are outside of your budget.
  • It shows you different variables. A good mortgage calculator will allow you to change one or more of the inputs to see how it would affect your monthly mortgage payment and the overall cost of the loan. This can be a great way to help you decide the best one for you.

Before beginning your home search, take a good look at your budget, ensuring that you haven’t forgotten any of your typical monthly expenses. Take into account the different mortgage loan programs and various down payment requirements, as well. You can then use these figures in your mortgage calculator to help you determine how much home you can afford.
You should also meet with mortgage lenders to understand your buying power, the mortgage process, and the rates and terms you will be offered from each. Shopping your mortgage with several different lenders can make a big difference in your home buying process, including saving thousands of dollars over the lifetime of your mortgage. Your agent can connect you with expert leaders in the area.
If you need support and guidance on finding your home, we’re here to help. Meet an agent or get preapproved for a mortgage today.

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