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Mortgage Payment Calculation - Save Money and Time

If you want to buy a home you often have to pay for it several decades.
Choosing the right mortgage will help you to save money and time.

First of all you have to ask yourself several questions.

Money in the bank?

Financial position?

Financial difficulties?

You and only you can answer the questions above, so answer them honestly and then learn more about the mortgage types:

Fixed Rate - you pay a fixed monthly rate (for 30 years).

Adjustable rate - usually starts with a low monthly payment;the interest rate will not change during the initial period (ranges from 6 months to 10 years). After the initial period the interest rate will change periodically (depends on the movement of indexes)

Balloon/Reset - Short Term Loan 5/7 years. You can pay off the loan at the end of the term (or refinance), convert it to a traditional loan at the current rates or sell your home.

Ok we found a type that will fit our needs, now we want to do a first calculation, but we need to make sure you know the terms that are needed for a first calculation.

What does PMI stand for?

PMI means private mortgage insurance. You will need one if your down payment is less than 20% of the sales price of your home. Most down payments are typically between 5% and 20%.
A down payment is the initial payment you will make after completing a deal with a lender. A PMI is needed to give your lender more security.

How is it calculated?

Here is an example:

If your house is worth 150.000$ and your down payment is 10% (15.000$) the lender will multiply 90% (135.000) by .005. The yearly rate will be 675$ ; the monthly rate 22,5$.

Well we now know about the different mortgage types and what PMI stands for.
Grab a pen and write down all values you might already know before we use a
mortgage payment calculation program.

Loan amount, Interest rate, Loan term, Property tax, PMI.

If you are struggling then do an estimate, this will be a rough calculation.

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