![]() Total Monthly Payment (5/1 Adjustable at 2.77%): $1497.Total Monthly Payment (30-year Fixed at 4.51%): $1680.Let’s assume the same PITI numbers used above, but this time on a 5/1 ARM with a lower interest rate: If so, they might be better off applying for an adjustable rate mortgage (ARM) rather than a 30-year fixed rate to take advantage of a lower initial interest rate. Katie and Mark know that he might get transferred in 5 years or less. Now that Katie and her husband have an idea of the full amount they’ll expect to pay in monthly mortgage payments, they should be all set…right? Katie would have lost valuable time looking at pictures of different homes, making lists of must haves and maybe driving around with the real estate agent, looking at homes she can’t afford. If Katie would have used one of the mortgage calculators in the fail column, she would have started shopping around online for a home in the $250,000 range thinking that she could afford the monthly payment.Ĭlearly that is not the case. Which of the fifteen most popular online calculators factor in PITI? Pass Let’s assume the same principal and interest rate on a 30-year fixed mortgage, but add in the rest: The $1,205 only accounts for the principal and interest, however she’ll also have to add in taxes, homeowners insurance, and private mortgage insurance. Katie and her husband might be tempted to think “Ok, we currently pay $1200/month for our apartment in the city, so if we get a 4.51% interest rate on the $237,500 loan we’ll only be paying $1,205/month…we can afford that, and we’ll be building equity!” Let’s choose the fifteen most popular online mortgage calculators (based on Google search results) and assess whether they pass or fail these three requirements, and how each would affect Katie’s monthly payment estimate: PITI Does the calculator include up-to-date mortgage interest rates that reflect current market rates?.Does the calculator let you compare between Fixed Rate and Adjustable Rate mortgages?.Does the calculator take into account the principal, interest rate, taxes, homeowners insurance, and mortgage insurance (PITI)?.What should you look for in a mortgage calculator to make sure you’re getting an accurate estimate of what you’ll be paying in monthly mortgage payments? Generally, there are three questions you should ask yourself, which we consider requirements for an accurate calculation: There are a number of online mortgage calculators that Katie can choose to estimate her monthly mortgage payments, however the vast majority of calculators don’t include key factors that greatly affect accuracy. How much can Katie and her husband expect as their total monthly mortgage payment? Time expected to stay in the home: 5 years or less.Maximum monthly payment they can afford: $1,500.They’ve made a point of saving as much as possible for a down payment and figure they can afford to put down 5%, or $12,500. They also know that there is a high possibility that Mark could get transferred for work within the next five years. They know that their monthly payment cannot be higher than $1,500. She and her husband Mark want to buy a home to raise a family in and think they can afford a house in the $250,000 range. ![]() ![]() Katie currently rents an apartment in the city for $1,200/month. Don’t believe me, just watch!…sorry Bruno Mars. Unfortunately, most mortgage calculators available in search results are not very accurate and, to be blunt, pretty useless. Choosing the right mortgage calculator is very important to correctly estimate your monthly mortgage payment.
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