How To Calculate Mortgage Payments
How to calculate your monthly mortgage payments, presented by GoBankingRates.com Editor, Casey Bond.
Hi, I'm Casey, and I'm the Editor of GoBankingRates.com. These days, mortgage interest rates have been so ridiculously low that a lot of people are wondering, ;If I were to go out there and buy a house, how do I figure out how much my mortgage payments are actually going to be?;
Well, while the formula for figuring out monthly payments is... less than simple:
M = P [ i (1+i)^n ] / [ (1+i)^n - 1 ]
...I would suggest using an online calculator instead. Go Banking Rates actually has a very simple mortgage calculator that you can use:
There are three simple things you need to know in order to use the calculator.
Step 1 - Enter how much you plan to borrow, obviously.
Step 2 - Enter your interest rate. I would suggest you actually enter the APR instead of the straight interest rate, because it's going to roll in additional expenses such as your brokerage fees, closing costs, property taxes, and give you a more accurate understanding of how much you plan to pay each month.
Step 3 - Lastly, enter how many years you want to take to pay it off. Generally people will go with 15 to 30 years.
Now one last tip: Keep in mind that your mortgage payment is not the only expense associated with owning a home. Once you buy your house, you're going to be exposed to a number of new bills you never had as a renter -- including things like home maintenance and repair, new utilities like water and trash, and maybe even Homeowners Association dues. So, while homeownership is a great goal to strive for, make sure that your income truly supports it before you go out there and buy.