One question we get all the time from first time home buyers is “how much should my mortgage payment be?”. The answer to this question is obviously different for everyone, and based on their situation.
Some of the factors that go into determining your monthly mortgage payment may include the following:
- the price of the home you are purchasing–the more it costs, the more your payment will be.
- the size of your down payment–the more you put down, the less your monthly payment will be.
- the term (amount of time you will be paying ie 10years, 15, 30) of the loan. –Longer term often means less money per month but more money overall.
- the type of mortgage you choose (fha, conventional, rd, va, etc)
- The interest rate– The higher the interest rate the higher your payment will be. Keep in mind that interest rate is also made up of a myriad of factors.
- Monthly Mortgage Insurance– If you do not put 20% down you will most likely have monthly mortgage insurance rolled into your payment. For FHA/RD loans this is for the life of the loan. Note that VA loans do not have monthly mortgage insurance.
- Property Taxes– In many cases your city taxes will be escrowed and rolled into your payments if you put down less than 20%.
- Insurance– In many cases your home owner’s insurance will be escrowed and rolled into your payments if you put less than 20% down.
If you are currently shopping around for your next home and would like to know what your average monthly mortgage payment might be please give us a call today.