Figuring out What a Mortgage Will Cost
For most adults, buying their first house is a daunting process. Between the search for a house, guessing what it will cost, and finalizing all the terms of the mortgage, house buying can be stressful. At Local Mortgage, we try to make that process easier for first-time homeowners in Colorado.
Thanks to our mortgage payment calculator, it becomes easy to see how much a mortgage will cost you on a monthly basis. To the surprise of many people, mortgages can be extremely affordable, while also giving the benefits that come with homeownership. In today’s blog, we will discuss how to figure out what a mortgage will cost, and how to take advantage of our mortgage payment calculator.
Find the Right House for Your Needs
One of the first major steps in the mortgage process is finding the right house for your needs. Perhaps you are starting the mortgage process because you found your dream house, or maybe you took your dream job and would like to get approved for a mortgage before finding the right house for you. Regardless of how you approach getting a mortgage, finding the right house is often one of the first steps to take since it makes you aware of how large of a mortgage you will need.
At Local Mortgage, we think it can be wise to get pre-approved for a mortgage prior to searching for your dream home. Our process, which can be done online or with the help of our mortgage experts, makes it easy to get you into a new house no matter how much help you feel you need along the way.
Determine the Size of Your Down Payment
The next major step in the process of buying a home is determining how large of a down payment you can make. When you take out a mortgage, you will have to make a minimum down payment. The minimum down payment for a mortgage depends on the type of mortgage selected. Federal Housing Administration (FHA) loans can have down payments as low as 3.5% of the cost of your home, while most conventional loans have down payments closer to 20%.
Saving for a down payment can be one of the biggest hurdles to buying a house, but once you have savings built up, home owning becomes extremely affordable. The larger the down payment you make, the lower your monthly payment will be. Perhaps you have some savings stored up, or maybe you need some time to save more. Regardless of your situation, to determine how affordable a mortgage can be, it will help to estimate how large of a down payment you can make.
Figure out What Your Interest Rate Will Be
The next step in the process is to find out what interest rate your mortgage will have. Mortgage interest rates cover a significant portion of mortgage costs, especially in the first few years of your mortgage payment schedule. Luckily, we live in a time of historically low interest rates, so modern mortgages often feature less money going to interest than in the past.
For your initial calculations, we suggest using the average interest rate associated with the type of mortgage you intend to take out. Local Mortgage makes it easy to check our interest rates. Remember, the interest rate on your mortgage could be even lower, depending on some aspects of your personal finances, such as your credit score.
Estimate Property Taxes and Other Expenses
Another aspect that affects how much a mortgage will cost you is additional fees and expenses you may not have considered. This includes things such as the property taxes on the home, the cost of home insurance annually, and other miscellaneous fees such as monthly homeowner’s association (HOA) dues. Thankfully, many expenses such as these are charged on an annual basis, and become simple to manage with monthly payments. It is smart to include these expenses in your monthly payment calculations, since that will give you a better idea of the overall cost of owning a home month-by-month.
Early in the process, it is sufficient to just estimate these costs based on the averages for the area in which you wish to purchase a home. As you get closer to your closing date, these costs begin to crystalize and you will get an even better idea of how much your mortgage will cost. Despite these additional expenses, some people find mortgages more affordable than renting on a monthly basis. Our team can help you compare the costs and find an affordable mortgage for you.
Use Our Mortgage Calculator
The mortgage payment calculator from Local Mortgage is designed to make figuring out the cost of a mortgage simple for you. The layout of the calculator is straightforward, and we even have a Comprehensive Guide to Using Our Calculators. By gathering information on the expected cost of the right house for you, the size of your down payment, your interest rate, and other expenses, it is easy to use our mortgage calculator to see how big a monthly payment will be.
If you have any questions about taking out a mortgage, then feel free to contact our team! Our mortgage experts have over 50 years of experience getting people into their dream homes at an affordable cost. And if you think you’re ready to buy a house, then apply today.