How to Calculate Your Estimated Monthly Mortgage Payments
Monthly mortgage payments are needed to pay off a home and own a property. Calculating the estimated monthly payments is important to determine if a home is affordable. There are variables that go into the payment of a mortgage besides just the repayment of the loan. All factors, like insurance and taxes, should be considered when calculating an estimated monthly mortgage payment.
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Instructions
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Calculate the loan repayment amount. Several online sources will calculate this amount when in plug in the appropriate numbers. Calculation at home requires finding the effective interest rate with the formula of effective interest = (1 + Interest/Payment Frequency)^(12/Payment Frequency)-1. The next number needed to calculate the mortgage repayment amount is the term of the mortgage, such as a 30 year mortgage that pays once a month being 360 months. The annuity factor is calculated as {1-[1/(1+Effective Interest)]^Mortgage Term}/Effective Interest. The final amount is found by dividing the payment amount by the annuity factor. The easiest way to calculate this amount is with an online mortgage calculator.
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Write down the amount needed for your home owner's insurance. The specific amount will vary by state, insurance company, the coverage in the insurance and other variables. Most homes will cost $100 to $200 a month for insurance. The insurance cost will rise as the value of the home rises, so keep in mind that $100 to $200 is a rough estimate.
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Divide the property tax amount by 12 months. This will usually be added to monthly mortgage payments until the home is paid off. This amount can vary by year based on the value of the home. The amount can be obtained from city or county tax assessment offices.
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Add the loan repayment amount, the insurance amount and the property tax amount. The final outcome is the estimated amount that will be due for the monthly mortgage payment. Remember that the actual repayment amount can differ from the estimate due to tax changes, insurance increases or decreases or similar variables.
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References
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