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How Do You Calculate Monthly Mortgage Payment?

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How Do You Calculate Monthly Mortgage Payment?

Postby Curran » Mon Oct 09, 2017 7:34 pm

A full housing payment generally consists of 4 or 5 parts and is referred to as PITI. This stands for principal, interest, taxes and insurance. Principal and interest payments are generally what are quoted from banks and what an amortization calculator will figure out for you.
I understand your home was worth $250,000 and I get the 25 years, I don't understand what you mean by a 5 year term at 3.5% (although I am going to assume you mean it is a variable rate mortgage with the first 5 years fixed at 3.5%)

P&I (PI of PITI) stands for principal and interest.
This payment depends on mortgage amount (not house value), interest rate and term.
I am going to use $250,000 as principal (if you put down a significant downpayment the mortgage amount would be less), 3.5% rate and the 25 year term.
Then your principal and interest payment are going to be $1251.65.
Note that if/when your interest rate changes after 5 years this part of your payment will change.
Your payment is strongly linked to the interest rate.
The same principal with a 6% interest rate would give you $1610.75 for the principal and interest component - just a watchout for you.


The T (of PITI) is property taxes that (nationwide in the US) average 1.5% of value per year (BE CAREFUL HERE! I have personally seen anywhere from 0.5% per year to 4% per year). So assuming your house is valued at $250,000 you'll pay about $3750 per year in property taxes which is another $312.50 a month.


The final part of PITI is insurance.
Homeowner's insurance should be ~$600 per year (unless in hurricane country and then multiply by 5). That's another $50 a month. If you put down less than 20% down, you'll have tp pay private mortgage insurance (PMI). Private mortgage insurance could easily add another $100 a month to your payment.


So the total payment is PITI - $1251.65 + $312.50 + $50 + $100 = ~$1714 a month.


good luck!
Curran
 
Posts: 59
Joined: Thu Jan 23, 2014 4:37 am

How Do You Calculate Monthly Mortgage Payment?

Postby Palben » Tue Oct 10, 2017 11:19 am

If I consider that your annual property tax is around $1000 and your homeowner?s insurance is around $300, then your total monthly mortgage payment will be around $1340.
Palben
 
Posts: 67
Joined: Sun Jan 19, 2014 4:12 am


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