How To Calculate Your Mortgage Payment Amount

Copyright © Chantal McBride
http://www.WebTD.com

Calculating the amount you want to borrow is pretty straight forward once you know the amount you want to borrow. The challenge is figuring out the amount you can comfortably afford to borrow given your other financial goals.

Suppose you evaluated your budget and determined you could comfortably afford to pay $3000 a month on housing expenses. To determine the exact size of mortgage that allows you to stay within this boundary, you need to consider several components: mortgage payments, property taxes, insurance and maintenance.

Property taxes are typically based on the value of your property. You can figure out the exact rate by contacting the local tax collector’s office in the town where you are contemplating buying property. (You can find the number in the government section of the local phone directory.)

When you own a home with a mortgage, your mortgage lender will insist that you have adequate homeowners insurance before funding your loan. The cost of your insurance policy is largely derived from the cost of rebuilding your home. Buy the most comprehensive homeowners coverage you can and take the highest deductible that you can afford, to minimize the cost.

To budget the maintenance cost, I suggest you allocate about 1 percent of the purchase price per year. In situations where you pay monthly dues to a homeowners association, the maintenance for the complex is taken care of. Checks with the association to find out how much the dues are.

Now you should have a pretty good understanding of what you need to consider for your mortgage payment amount. I hope you find this information helpful when deciding what pricing bracket fits within your budget.



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