Calculating the Size of Mortgage Payment
Calculating the size of your mortgage payment once you have decided how much you want to borrow is a matter of simple calculation. However, the difficult part is deciding how much you can afford to borrow in the 1st place. In order to calculate how much you can afford to borrow, you 1st need to know the overall cost of owning and maintaining the home. These costs include insurance, taxes and maintenance costs. Maintenance cost is something that a mortgage lender usually does not take into consideration when calculating his lending limit. However, this is a necessary cost and you should not ignore it.
If you have used the table to calculate your expenses of owning a home, the part of that which constitutes your mortgage payment, your estimates will differ by adjusting different costs to different factors. For example, if you figure that you can afford $2000 per month as housing expense, you may come to the conclusion that only $1500 per month qualifies as mortgage payment.
Other expenses include taxes, insurance, property maintenance and other expense associated with buying the home. This expense could also be things like additional commuting costs etc.
The amount that you decide to spend on a home and save for will make a difference in the amount that you can borrow as mortgage. If out of $2000, you only decide to spend $300 on other expenses, you can borrow $1700 per month worth of mortgage loan. If these expenses are higher then will obviously have to adjust and borrow less.
You can use the following table to calculate the amount you will need to pay your monthly mortgage payment depending upon the interest rate and the term of the mortgage. Simply divide the amount of the mortgage loan by 1000 and multiply it by the relevant number from the table. For example, taking out $100,000 mortgage at 4.5% for 30 year mortgage will mean that you have to pay a monthly payment of 100 (100,000/1000) multiplied by 5.07 which gives you a figure of $507 per month.
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