5 Steps to Calculating Your Monthly Mortgage Payment

by David Bakke

Gray electronic calculator buttonsWhen you want to buy yourself a home, you have to take out a mortgage. The most important factor in determining your mortgage repayment amount is the mortgage rate. Prior to going to a lender for a loan amount, you should know how much you have to pay in principal and interest each month. You can calculate a mortgage monthly payment by using an online mortgage calculator.

What a mortgage calculator is

An online mortgage calculator is a tool which will calculate your mortgage payment, to help you to determine how much you can borrow on your home. This tool enables you to compare the costs of different interest rates and also helps you find out the total number of payments you need to make, to repay the full loan amount.

The factors that determine a mortgage payment

There are many factors that are involved in determining your mortgage payment. These are:


  • Cost of insurance
  • Local property tax rate
  • Interest rate on the mortgage
  • Loan term
  • Loan amount
  • Private mortgage insurance (if you’re unable to make a 20% down payment)


How to find out your monthly mortgage payment

You can calculate a mortgage payment, with the help of a mortgage tool, if you follow the steps mentioned below:

Calculate monthly payment: You need the mortgage tool to calculate your monthly principal and interest payment, which is based on the amount of the loan, interest rate and the loan term. There are a number of websites on the internet that have free calculators, all you have to do is put the values of the components mentioned above, and the calculator will figure your monthly payment amount.

Find out tax amount: The calculator can determine the amount of your annual property tax on your home and divide this number by 12, to find out the monthly payment towards taxes. If you want to make a biweekly payment, it will divide the number by 26.

Determine insurance cost: To find out how much your homeowner’s insurance payment will be the calculator has to divide the total premium amount by 12, if you are paying monthly.

Calculate the PMI amount: To determine the private mortgage insurance (PMI) amount, you need to put in the figure in the required box.

Find out the total: After you have put in all the values for the different components, the mortgage calculator will find out your monthly payment amount, number of total payments to repay the loan, along with PMI, taxes and insurance.

When you use a mortgage tool to calculate a mortgage payment, you should also look at the amortization schedule. This schedule will help you in breaking down how much you’re payment is towards the principal and how much is towards the interest over your full loan term. Knowing your approximate monthly repayment will save you from hassles while handling lenders and will help you to get the best mortgage deal.

As always, your comments and feedback are appreciated below.

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