Even though there are tons of mortgage calculators on the web, here’s a quick and easy way to ballpark your monthly mortgage payment in your head. If the house is $200,000, just multiply by 10% and subtract “a little bit” So, your payment should be a little under $2000/month…maybe $1700/month would be a good guess, depending on the taxes and interest rate.
If you don’t mind a little math, you can use interest rate “factors” to make this simple and this is the only part you’ll need to memorize…. if your interest rate is 5%, the factor is 5.37. If the rate is 6%, the factor is 6. If the rate is 7%, the factor is 6.65.
Now, multiply the factor by how much you want to borrow…. for example, $200,000 at 5% rate, is $200 x 5.37 equal $1,074/month. Don’t forget, you also have to pay property taxes, homeowners insurance and private mortgage insurance (PMI or MIP) if you put less than 20% down. Take the annual taxes dived by 12 months and add that to the payment, let’s guess $5400/year or $450/month… a nice round number 🙂 Estimate your homeowners at $4 for every thousand of purchase price, so $4 x 200 that’s $800/year or $67/month and add that too. So that’s $1074 plus $450 plus $67 equal $1591 and let’s add $100 for PMI (I’ll show you how to figure that later) so were up to $1691/month.
So, use a calculator, or ballbark it right in your head…. Hope that helps! BTW, if you want a 15 year loan or different interest rates, just google “interest rate factor” and you’ll see everything you ever wanted to know.
Thanks for Reading,