How To Calculate Monthly Mortgage Payments

New homeowners should learn how to calculate monthly mortgage payments before purchasing a home. A mortgage is one of the biggest financial commitments you will ever make. Many mortgages last for 30 years, and cost the homeowner, in interest, the original amount of the home purchase price. It is important to be aware of your monthly mortgage payment and obligations before signing a closing contract. To calculate monthly mortgage payments, you will need an automatic mortgage calculator.

1. Add to the negotiated purchase price of your home any closing costs or other fees that you plan to roll into your home loan. Subtract your down payment from this price. This new price is called your principle investment.
2. Find out from your lender if you will be required to purchase private mortgage insurance (PMI). Usually, buyers with less than twenty percent equity in their new home are required to purchase PMI. If you are required to purchase it, find out what your monthly insurance payments will be. Often, PMI premiums are billed yearly to an escrow account. An escrow account is a special account that your lender creates for you to make paying taxes and insurance easier. Escrow billing is added to your monthly mortgage statement.
3. Contact your county and city tax offices to find out what your tax rate will be. Include street and bridge taxes, county taxes and school taxes. These taxes are billed to your escrow account each month as well, and will be distributed evenly over the twelve months of the year.
4. After purchasing homeowner's insurance, find out what your yearly premium will be. This, too, will be billed to your lender's escrow account and billed to you evenly over the course of a year.
5. Use an automatic mortgage calculator to calculate monthly mortgage payments. Insert the principle investment, your lender's interest rate, private mortgage premiums, taxes and homeowner's insurance premiums. Include the terms of the mortgage (usually between five and 30 years). The calculator will automatically estimate your monthly mortgage. Several websites offer free calculators which do not require any special expertise to use; simply search for one on the internet.