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Believe it or not. Mortgage payment calculation estimates can vary significantly based on which state you live in and can vary even within cities and counties. Property tax amounts are the main culprit. Some states have really expensive taxes while others are relatively inexpensive. Utah falls into the middle group. Here is how to estimate a payment correctly:
Gross annual income - This is the combined amount of household income you receive before any taxes are taken out of your paycheck.
Monthly Debt Payments - Auto loan payments, monthly minimum credit card payments, student loan payments, and any other debts you pay on monthly. Only use the minimum required payment for each account.
Conventional Loan Down Payment - First Time Homebuyers can use as low as 3%, Regular buyers use 5%, 20% allows you to not need mortgage insurance
FHA Loan Down Payment - 3.5% is the minimum - 5-10% allow the monthly mortgage insurance on an FHA loan to drop off after 11 years. Otherwise, FHA mortgage insurance is permanent.
VA Loan Down Payment - No down payment is required but you will be required to pay a few thousand in closing costs and to set up an escrow account for taxes and insurance.
USDA Loan Down Payment - No down payment is required but you will be required to pay a few thousand in closing costs and to set up an escrow account for taxes and insurance.
Annual Interest Rate - Do your best to estimate where current rates are. You can always contact us for help.
Private Mortgage Insurance - This is required on any FHA or Conventional loan where the down payment amount is less than 20%. It can be paid monthly, upfront, or the lender can pay it and give you a higher rate. Estimate between .2% and .5% of the loan amount. Higher credit and multiple borrowers on a loan are helpful.
Monthly Insurance - This is your homeowners insurance estimate. A good general rule is to use .125% of the loan amount. (.00125 * your loan amount)
Monthly Property Taxes - This is your property taxes due to the county. A general rule of thumb is to use .027% of your loan amount. (.00027 * your loan amount)
Length of Mortgage - This is your mortgage loan term. Most people stick with 30 years.
Feel free to reach out to us if you have any questions or need help estimating your mortgage payment.
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