How to Calculate Payment & Interest

Your monthly housing payment includes much more than just the mortgage.
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So you've decided you want to find and purchase a house. But before you can start looking for a new place, you need to understand how much the new pad is going to cost. In addition to the monthly mortgage payment, you must figure out other associated expenses, including homeowner's insurance, property taxes and, if necessary, private mortgage insurance.

Step 1

Estimate the cost of your new home as the starting point for your remaining calculations. On average your mortgage payment will cost between $600 and $700 per month per hundred thousand dollars borrowed. In this estimation, err on the side of caution, this number is just a starting point for the remaining calculations.

Step 2

Estimate the amount you can put down for your home loan. If the down payment is more than 20 percent of the cost of the home, you will not be required to obtain private mortgage insurance (PMI). If the down payment is less than 20 percent, you will have to obtain PMI.

Step 3

Contact your bank or lender to find an estimate of the interest rate for your mortgage.

Step 4

Contact your insurance agent and obtain an estimate of cost of homeowner's insurance in your area. While you will need an exact home value for a quote, most insurance companies can provide an estimate based on the price range of your home.

Step 5

Contact your local tax assessor's office for the property tax rate in your area. Many municipalities have this information available online, but don't be afraid to call the assessor's office if you cannot find it on their website.

Step 6

Find a free, online mortgage calculator and plug in all the estimates you came up with. The calculator will do the hard work and provide a complete monthly cost of your new home, including mortgage, insurance, possible PMI, homeowner's insurance and property taxes.

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