How to Calculate Mortgage Payments for a Home

There are several components that go into a mortgage payment. Missing something can often lead to an unpleasant and very stressful surprise. Follow these simple steps to avoid any unpleasantries or at least be ready to handle them before they actually occur.

Instructions

Difficulty: Moderate

1. Calculate the monthly interest/principal payment based on the amount of the mortgage, the term of the mortgage (how many years the loan is for) and the interest rate. A number of websites offer free mortgage calculators; simply plug in these components to get this number.
2. Determine how much the annual property taxes are on the home, and divide this number by the number of mortgage payments: 12 if it is a monthly mortgage, 26 if it is biweekly.
3. Determine how much your homeowner's insurance will cost annually and divide by the number of mortgage payments (as you did above).
4. Figure in private mortgage insurance (PMI) if you are required to pay it.
5. Add these items - the calculated monthly interest/principal payment, insurance, taxes and PMI - together to determine your actual mortgage payment.

Tips & Warnings

• The seller or listing agent can tell you what the annual property taxes are on the home.
• Most mortgage lenders want the borrower to pay homeowner's insurance as part of the mortgage payment to make sure it gets paid.
• PMI is required by many lenders on first-time buyers, buyers with small down payments and buyers who do not have extensive credit histories or do not have outstanding credit.
• Some websites that have mortgage calculators will even calculate in taxes and insurance.