NOLA Lending
   Your Loan, Your Way

Call Us Now         
985 612 2784

Posts Tagged ‘payment’

It is important for anyone who is considering obtaining a home mortgage to learn how to calculate monthly mortgage payments or the amount of money you pay each month to buy your home. A variety of factors play a role in what this cost will be, including your interest rate, the length of the loan, your creditworthiness and the current lender’s requirements. 

More complicated than you might think

The problem with learning how to calculate monthly mortgage payments is that the process is pretty complex mathematically. In short, your loan is not the principle borrowed amount divided by the number of monthly payments. However interest plays a significant role in this process.

The real issue is that the interest on a mortgage loan is compounding, which means that it applies to the current balance of the loan. Also important is the fact that most of your monthly payment starts out with being interest payment while over time, the percentage you pay each month increases until you are paying nearly all principle.

Making It Faster

So, how can you calculate the monthly mortgage payment you are likely to pay? A good place to start is with a mortgage calculator. Many of these can be found online and are free of charge. None of your personal information is gathered in this process, and all you will just need to enter the terms for a loan you are considering and it will do all of the mathematical work for you.

This method does allow for individuals to get information right away as it does give you an instant quote on basic amounts and rates. It will also allow you to:

• Compare how much of a difference a down payment makes on the loan.
• You can determine how paying over a long period, or a shorter period can affect the monthly payment
• You can compare the interest rates of various loans provided to you by lenders

Nothing beats personal advice

The good news is that an online mortgage calculator is easy to use and can provide you with an estimate about the loan you hope to get. However, be very cautious with the information you find online as it may not apply to your specific situation.

Things to watch out for with online mortgage calculators:

• These online calculators may or may not accurately apply things like taxes, home owners insurance and other fees such as condo dues
• You may not accurately judge the rate you qualify for
• Mortgage insurance may vary depending on the type of loan
• Rates fluctuate daily

Our best advice is to speak to one of our helpful team members and get an exact quote and payment estimate for the home you want.

Getting behind on payments can happen to anyone, but not getting help to get caught up can mean a significant risk of losing your home. And for those who become behind or facing the prospect of foreclosure, there may be government help for late mortgage payments. Keep in mind that the government is not going to simply give you money to get your loan caught up.

However, today’s government regulations do offer some protection for homeowners, and many lenders are at least making an effort work with borrowers to get their loans back on track.

First steps you can take

The government suggests individuals to take their first step by calling their mortgage lender and determining if the lender can help them directly. Oftentimes, lenders are willing to adjust interest rates or to help individuals to get caught up by making home loan modifications. For example, the lender may agree to tack on the missing payments at the end of the loan or may agree to allow you to repay the missing payments over a period of time.

Making Home Affordable

Another option that may work if the lender is not immediately willing to work with you is the Making Home Affordable Modification Program , called HAMP. This is a form of government help for late mortgage payments. You may qualify under certain circumstances, if you meet the right requirements, such as the following.

• You are living in the home you are behind on mortgage payments (it must be your primary residence).
• You owe less than $729,750 on your mortgage and began it prior to January 1, 2009.
• Your payment on the loan is more than 31 percent of your gross income at this point.
• You cannot afford to make your mortgage payment due to some type of financial hardship, such as a job loss or because of medical bills.

In these situations, the lender may agree to work with you under this government help for late mortgage payments. You will need to apply for this type of help through the federal government’s website for the program. You may or may not receive help. It is important to consider your long-term goals here. In some situations, if you do not have the financial means of being caught up, you may lose your home due to the inability to pay your loan.

Calculating how much you can afford on a home mortgage is a lot more complex than calculating how much you can afford in rent. In the latter case, a third of your income is usually a good measure for the most you want to pay in rent. Where a mortgage is concerned, you have to take some other considerations into account when you’re shopping around for houses.

Property Taxes

The amount you pay to finance the cost of the house is only the first part of determining how much the mortgage will actually cost you. You’ll also have to take into account the cost of property taxes in the area where you’re buying. Because this is an unavoidable expense, you have to factor it in from the start. If you don’t, you’ll almost certainly underestimate the costs you’ll pay each month.

Take the yearly taxes on the property and add a 12^th of that sum to your monthly payments as most people pay this monthly via their escrow account.  That way you avoid paying a large sum at one time each year to satisfy your property tax bill.

Homeowners, Flood & Mortgage Insurance

Homeowner’s insurance will be a necessity, as well. You’ll have to factor this into the cost of your home every month. Remember not to go by an average in this case. The homeowner’s insurance could be much more expensive if you live in an area that’s prone to flooding or to fires. This could vary by the neighborhood, so be sure that you’re making a good estimate of what you’ll have to pay.

Unless you show up with a very large down payment, you’ll also need mortgage insurance. This protects the lender from taking all of the risk if you should happen to default on the loan. You’ll have to factor this into the total cost of the mortgage, as well. Make sure your mortgage loan officer can explain this to you and make sure you understand the amount you’ll have to pay.

Debt to Income Ratios

Generally speaking, your mortgage should cost you somewhere between 28 and 33% of your gross monthly income. This cost has to include all the aforementioned expenses, as well as any others that may exist, such as neighborhood association fees and so forth.

The mortgage loan officers at NOLA Lending will be able to help you find a suitable loan that fits your income. One of the things that caused the housing crises was people buying way more than they could realistically afford. If you make smart decisions and buy within your means, a mortgage can be an affordable form of financing that offers you a lot of joy for the amount you pay every month.

Please contact us to assist you in calculating your estimated monthly payments!