While the actual price of the house is one factor when calculating a home mortgage, it is just one consideration. Calculating payments for a monthly house payment involves taking into account a series of factors, including the sale price, down payment, loan fees, property tax, homeowner’s insurance and any homeowner association fees.
Interest Rates and Points
The interest rate you pay makes a significance difference in your monthly house payments. If you borrow $100,000, and take out a 30 year loan at 4 percent interest, your monthly payment to cover just this amount will be approximately $477. If the interest rate is 6 percent, your monthly payment jumps to about $600 a month.
Some consumers opt to pay points, to bring down interest rates. A point is one percent of the loan amount. Before paying points to bring down your interest payments, calculate how long it will take you to pay back the cost of points, in interest savings. If you plan to stay in the house 30 years, it may be a smart choice. Yet, if you intend to move within 5 years, it might not be a wise financial decision.
