Don’t rely on others, estimate your mortgage funding yourself!
Why you need a mortgage calculator
California Mortgage Calculators: Accurate Calculations for Better Decision-Making
ay to the seller in cash, usually, it’s around 20% of the total price of the home. To get the best deal, you should strive to pay the maximum possible amount in your down payment as it will save you the burden of higher interest rates down the line.
This is the amount of money you’re supposed to pay each month to cover HOA fees, homeowner’s insurance, and mortgage. In order to judge the affordability, you should ensure that this does not exceed 20 – 25 % of your monthly salary. Otherwise, you’ll be left with a really tight budget to pay off other important expenses.
Homeowner’s Association Fee
The HOA directly governs the rights of the property owners in a given community. When individuals buy a home in such locations, they are liable to abide by the rules laid out by this association. Thus, the fee you pay is to become a certified member of the latter.
Private Mortgage Insurance
Sometimes, people can fall short on paying their mortgage on time. In such cases, a PMI or Private Mortgage Insurance comes in handy, whereby, you’re protected by this policy. Usually, it costs less than 1% of the loan which can be avoided by a down payment higher or equal to 20%.
To put it simply, this is the total dollar price that you’re expected to pay for the house. This is based on several factors such as your credit score, monthly income and Debt to Income ratio. The latter determines how much income your debt eats up, in that, if you have already taken up a lot of debt, the chances of getting a loan approval reduce. Therefore, by estimating a value for the home price, you can gauge your affordability against the given metrics.
The monthly interest payment is a set percentage of the total loan payment of your home. You should aim for a lower percentage from the get go as it will reduce your financial burden. Regardless, the more you pay off your loan, the lesser amount you’ll be liable to pay each month in the future.
Depending on the location of your home, you will have to pay a certain amount in property taxes to the Government. The rates vary from state to state – in some cases, the rates vary for different counties as well - and are calculated based on the total home value. Naturally, if you’re purchasing a high-end house in an expensive community, the value will be higher. Property taxes are included in the mortgage and billed annually.
I don’t have an existing credit score; can I still apply for a loan?
What matters for the lender is your capability to repay the loan and if your credit hasn’t already been evaluated, you can still apply for a loan. However, you will need to submit extra paperwork such as a bank statement as part of the manual underwriting. A review of the latter will determine your eligibility to take on debt and this can take some time.
I got preapproved, what now?
This is the first step of the process which means that you should now begin the house hunt. Since you’re preapproved you can look for homes that fall in your budget.
How will the interest rate impact my home loan?
The higher the percentage, the larger the amount you will be liable to pay each month. Verily, it is important that you only sign a contract once you’re satisfied with the interest rate. This is another reason why it is important to choose the right lender and conduct a feasibility analysis of the various types of mortgage packages available.
Choosing the right mortgage type
Getting the best deal is directly related to choosing the right mortgage type to finance your home. Our mortgage calculator tells you the financial impact of different loan types and also highlights the interest you’ll have to pay with a longer-term or shorter-term loan. This allows you to forecast your savings and make the right decision based on long term implications. Factors such as monthly income and PMI are accounted for, and this leads to accurate estimations that paint a clear picture of what you should expect with such a hefty purchase. Verily, all you need to do is put in some information and select a specific loan type to get an estimate. In general, long-term loans such as those spanning over a period of 30 years have low payment amounts but highest interest rates. Ideally, you should opt for something shorter than 30 years in order to get reduced rates, but for that you’ll need to asses your current financial situation.