Estimated Mortgage Payment
There is a lot that you need to consider when looking for a mortgage. Not only do you need to accumulate a down payment, but you need to figure out how much your mortgage payments will cost per month and whether or not this is something you can afford. Considering that, continue reading to discover everything that you need to know about estimated mortgage payments.
Working out your estimated mortgage payments
There are a lot of different mortgage calculators available online today that can help you to work out your estimated mortgage payments. There are a number of key factors that are considered when it comes to working out how much your mortgage payments are likely to be per month. This includes the following:
- Your down payment and the percentage it amounts to
- The interest rate
- The length of your home loan
The equation for estimating your mortgage payments
The typical equation for working out your typical mortgage payments is as follows:
M = P[r(1+r)^n/((1+r)^n)-1)]
Yes, it looks pretty complex, doesn’t it? However, if you input the figures in a calculator, we promise; it does work out. Plus, you do have those mortgage calculators that are already set up so you don’t need to worry about the equation yourself.
So, let’s take a look at what each letter represents so that you can do the equation yourself.
- M = M represents the total monthly mortgage payment, i.e. the figure that you are trying to achieve from this equation.
- P = P represents the principal loan amount.
- R = R represents your monthly interest rate. Just to make matters confusing, most lenders will provide you with a yearly interest rate. So, you will need to divide this figure by 12 in order to get your monthly interest rate.
- N = N represents the number of payments you are going to need to make over the lifetime of the loan. You need to multiply the number of years within your loan by 12 (the number of months in a year), so this will enable you to figure out the total number of payments you will need to make over the lifespan of the loan.
Remember that a mortgage calculator will only provide an estimate
It is important to realize that a mortgage calculator is only ever going to provide you with an estimate. There are a number of different factors that can influence how much you pay. This includes insurance, property taxes, loan term, interest rate, down payment, and purchase price.
Most of the mortgage calculators will also assume a few things, for example, making assumptions about closing costs and that you are buying a property as your primary residence.
Mortgage payments per state
While some states have relatively lower property values, homes in states like New Jersey, Hawaii, and California generally will have much higher property expenses, which means people are going to need to pay more for their mortgage every month. Plus, mortgage interest rates differ by state.
An American Community Survey carried out in 2018 revealed that homeowners paid $1,556 per month on average. Not only did this incorporate their mortgage payment, but also HOA fees, utilities, property fees, and insurance costs where required.
Let’s take a look at some of the median monthly payments per state from the 2018 survey so that you can get a better understanding:
- Wyoming - $1,428
- Washington - $1,826
- Texas - $1,549
- North Carolina - $1,290
- New York - $2,114
- Mississippi - $1,134
- Hawaii - $2,350
- Florida - $1,466
- California - $2,282
- Arkansas - $1,071
Final words on estimated mortgage payments
Hopefully, you now have a good start. You need to know about working out your estimated mortgage payments. We hope that the educational material and information we have provided above has helped you to get a better understanding of how much you are likely to pay per month for your mortgage. It is important that you have a thorough understanding of this so you can make sure you can afford your mortgage payments. Discuss further with MortgageQuote.com if you have any questions.