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Calculating Your Total Monthly Mortgage Payment

In many areas of the country you can purchase a home and pay less for your monthly mortgage than you might pay for rent – however, when looking at mortgage calculators online, be careful that the monthly mortgage payment you’re looking at is the complete picture of all required homeownership costs and not just the amount you’ll need to reimburse your lender each month for your mortgage loan. In some cases, property taxes can be 50% (or more) of a monthly mortgage payment amount, taking the true price of home ownership much higher than originally anticipated. When you’re looking to become a home owner, make sure that you understand the full financial commitment you’re entering into. There are many advantages of home ownership, but you also want to ensure that your home purchase doesn’t exceed your financial limits.

The top items to include in your calculation of “monthly mortgage payment”

Some online calculators will only include for you in a mortgage calculation the cost of the amount of your mortgage loan from the bank, which is a great starting point but not the end of the conversation. You’ll be required to pay property taxes, which you can either roll into your mortgage payment each month or pay to your city/town directly once or twice a year. You’ll also need (i.e., be required by your mortgage lender) to carry homeowners insurance, which may average another hundred or more dollars a month. The most common option is to pay your taxes and insurance to your mortgage lender, as part of your payment each month. Your lender will then make the required payments on your behalf to your city/town and your insurance company. As you can see, the amount per month that you’ll owe on your mortgage itself won’t give you a complete picture of what you’ll actually be paying out each month. Failure to pay either of these two items can result in loan default and home foreclosure, so it’s not something that you want to view as optional.

But don’t forget…

Utilities. Trash. Water. Lawn maintenance. And perhaps the largest expense of all home ownership costs: repairs. Many people pay their own utilities in an apartment, but the costs for a single family home are often higher than those in a condo or apartment, so that’s another monthly expense you’ll want to take into consideration when looking to buy. Water and/or garbage may also be included as part of your property tax bill, but these are items you’ll want to double check so that you are not surprised down the line. Additionally, many homes come with landscaping costs which are not found when you live in an apartment: tree-trimming, lawn maintenance, snow removal, etc. And at some point in your home ownership adventure, your home will need repairs and/or renovations. Many people paint their home when they move in or make other upgrades that may be more expensive than first anticipated.

These expenses shouldn’t scare you away from home ownership, but make sure you understand the full cost of home ownership before you make what will likely be one of the largest financial decisions of your life. An experienced mortgage professional can help you to estimate what your total monthly payments will be, including taxes, insurance and other known variables.

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PROGRAM RATE APR
30 Year Fixed 3.875% 3.93%
15 Year Fixed 3% 3.06%
5/1 Arm 3.5% 3.672%
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