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How to Easily Calculate Your Mortgage Payments

Mortgage loans are a valuable way to own a home without monthly payments. Choosing one depends on several factors, such as your credit score and income. The amount you can borrow depends on how much of a down payment you can afford or want to make, what type of amortization period is best for you, and where the interest rate falls about your mortgage rate.

How to Calculate Mortage Payments

1. Make a list of all the monthly costs you need to worry about.

It’s important to note that the mortgage payments are not the only monthly cost of owning a home, so make a list of all charges you will have to pay when buying one. Some of these expenses include property taxes, homeowner’s association fees, ongoing maintenance and repairs, utilities, mortgage insurance, PMI (if required), private mortgage help insurance (PMI) if your down payment is less than 20% of the total home purchase price or if the loan-to-value ratio is more than 80%.

2. Make sure your credit score is high enough to get a loan

The minimum FICO score for an adjustable-rate mortgage (ARM) will be between 660 and 700. A fixed-rate mortgage (FRM) will require a minimum score of 720 to qualify. If you can’t get the best rate because your score is below that but still want a loan, look at other ways to finance your home.

3. Decide on a down payment

You can also choose to pay points—a fee that is similar to interest on an additional amount of principal—to lower the interest rate on your mortgage. Points are typically 1% of the loan amount, ranging from 0.25% for 30-year loans to 1.5% for 15-year loans. If you use a mortgage with an interest-only option, the interest on the loan will usually be higher than what’s charged for monthly payments.

4. Determine the amortization period

Your loan amount is what you see on your mortgage application and the monthly payment you will make over a specific period, such as 30 years or 25 years. You can also pay off your loan in full in five years, leaving at most 25% of the original principal. You can shop around for better rates on shorter amortization periods.

Buying a home is essential, and you should do all you can to ensure the process goes smoothly. It shouldn’t be taken lightly, so before deciding on your loan, go over all of your options with a mortgage lender.

P.S: You can use this Free Mortgage Calculator tool on my website!

Andik Imran

Engage a professional Singapore real estate agent

ANDIK IMRAN | BSc Business
CEA Reg No: R061801F

andikimran@realestatedad.sg
9450 8732
PropNex Realty Pte Ltd

PropertyGuru | Instagram | Facebook

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