Mortgage Loan Payment Calculator

By Stock Research Pro • May 1st, 2011

The mortgage loan payment calculator below can help you determine what your monthly mortgage payment will be given the interest rate available to you, the amount you are borrowing, and the number of years over which you are financing the your mortgage. All prospective new homeowners must ask themselves how much house they can reasonably afford, and this calculator will help you to calculate what your monthly commitment to your lender will be. The information below can help you to understand loan eligibility considerations from the lender’s perspective.

The Simple Lender Loan Eligibility Formula

From the perspective of the mortgage lender, the amount of money they are willing to lend to you starts with a simple formula that says that a borrower’s ,monthly mortgage payment should not be greater than 28% of their gross income. So if the gross income of the borrower is $60,000 per year, the formula would say that the buyer can reasonable afford to pay $16,800 per year in mortgage costs or $1,400 per month (including the mortgage principal and interest, taxes on the property, and insurance fees). Borrowers who have an exceptional credit history might qualify for a mortgage in excess of this 28% rule-of-thumb.
Learn about mortgage qualifying ratios

Mortgage Considerations for the Borrower

In order to make an informed decision, borrowers should make sure to become familiar with the following terms and the impact each can have on their mortgage:

  • Annual Percentage Rate (APR)- The borrower’s annual percentage rate represents the cost of the loan based on components that include interest, mortgage insurance, and other fees.
  • Points- Mortgage points can come in the form of origination points and discount points with each point equaling about 1% of the total mortgage amount. Paying points (essentially pre-paying interest and closing fees) can help lower your mortgage rate.
  • Fees- The fees associated with securing a mortgage can include the costs of running your credit report, appraisal costs, title insurance, escrow costs, and more.
  • Private Mortgage Insurance (PMI)- If the borrower’s loan amount is greater than 80% of the purchase price of the property, private mortgage insurance can be incurred to help protect the lender from taking a loss on the property due to foreclosure or default.

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    The above information is educational and should not be interpreted as financial advice. For advice that is specific to your circumstances, you should consult a financial or tax advisor.

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