What Does a Mortgage Payment Consist Of, The Truth About, how to calculate a mortgage


What Does a Mortgage Payment Consist Of?

How to calculate a mortgage payment

More fun and exciting mortgage Q A: “What does a mortgage payment consist of?”

Have you ever been curious what you’re paying each month to live in your shiny new (or possibly dingy old) home or condo?

A mortgage payment, assuming it s not an interest-only loan, generally consists of four key items:

  • a principal portion
  • an interest portion
  • property taxes
  • homeowners insurance

Mortgage Payment = PITI

How to calculate a mortgage payment

There’s a handy acronym to sum up the mortgage payment breakdown known as PITI. When you say it, it sounds like pity. And I suppose it is a pity that we have to make mortgage payments every month, often for a staggering 30 years or 360 months, but I digress.

Anyway, mortgage lenders typically want X number of months of PITI for cash reserves if you’re verifying assets when you apply for a mortgage. In short, this tells the underwriter you can actually pay back the loan, at least for a few months

Lenders will also use the PITI payment to determine your monthly housing expense, which is then used to calculate your DTI ratio. So it s pretty important!

The principal portion of your mortgage payment is essentially the amount of debt you are borrowing, which eventually transitions into your ownership in the home, also known as home equity.

The interest portion of your mortgage payment is the cost of borrowing that money for the loan, or the expense the bank or mortgage lender charges for taking on the risk.

The tax portion of the mortgage payment is paid to the local government based on the assessed property value and tax rate for the area.

Finally, the insurance portion of the mortgage payment covers homeowners/hazard insurance, which protects the borrower (and lender) from a number of dangers and provides liability coverage.

For those with a mortgage impound account (typically required for a high LTV loan), taxes and insurance are paid monthly with the mortgage payment.

If you aren t subject to impounds, you must pay taxes and insurance directly to the tax office/insurer, and the mortgage payment each month will consist of only principal and interest.

This can be a relief on a monthly basis, but make sure you stash enough cash to pay for taxes and insurance when they are due. I ve had friends who forgot they were on the hook for a big property tax bill, and didn t save accordingly.

Note: If your loan-to-value exceeds 80 percent on a single loan, you’ll also have to pay mortgage insurance on top of the aforementioned, which is one reason why putting 20% down can be a smart move.

And the mortgage payment on an interest-only loan consists of just interest, taxes, and insurance, meaning you can only build equity in your home if the property value appreciates.

If we re talking about a negative amortization loan, such as the once popular option arm, making the minimum payment wouldn t even cover the interest due each month. Of course, you d still have to pay the required taxes and insurance.

* You may also see the acronym PITIA, which stands for principal, interest, taxes, insurance, and association dues. This may apply if there is an HOA that charges due for your property each month.

How Are Mortgage Payments Applied?

In the beginning of the loan term, mortgage payments primarily go toward paying off interest because the loan balance is so high.

While this may be viewed as a negative, it does mean mortgage interest tax deductions are bigger and more beneficial early on.

Over the years, as the outstanding balance decreases, more of the monthly mortgage payment will go toward principal each month until you eventually own the home outright. This is how amortization works.

It also explains why some savvy homeowners choose to make biweekly mortgage payments, thereby increasing the amount of principal paid early on and decreasing the amount of interest paid over the life of the loan.

Doing so will also shorten your mortgage term, which is beneficial if you want to own your home sooner, but don t want the commitment of larger payments associated with certain loan programs such as the 15-year fixed.

As a rule of thumb, the longer your loan term, the more you ll pay in interest because the loan is paid off slower. If you re able to accelerate your payoff, you ll pay less interest.

What Will My Mortgage Payment Be?

  • principal
  • interest
  • real estate taxes
  • HOA dues
  • mortgage insurance
  • flood insurance
  • homeowners insurance

If you re trying to figure out what you ll be paying your lender each month, consider all the ingredients of a mortgage payment and your mortgage rate.

As noted, if you ve got an impound account, add up the principal, interest, taxes, and insurance. Those last two bits will be determined by your lender, so ask them to break it down.

The principal and interest portion is something you should be able to calculate on your own. Simply plug your loan amount and interest rate into a mortgage calculator to figure out the monthly payment.

If it s interest-only, plug those two items into an IO calculator. Principal will no longer be part of the equation.

Don t forget the extras. Do you need to pay mortgage insurance premiums each month? For example, there are monthly mortgage insurance premiums on FHA loans that must be paid.

What about monthly HOA dues? If it s a condo, there probably are, though you might pay them separately to the association and not your lender.

Either way, it s good to know what your total housing payment will be so you can budget accordingly.

The payments you see advertised typically only include principal and interest. That makes them look relatively cheap. Once everything else is added, the payment can look a whole lot different.

In summary, no one enjoys making mortgage payments every month, but knowing where that money is actually going should make you a more informed borrower. And it could even save you some money!


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Mortgage Payment Calculator Canada

Our mortgage payment calculator calculates your monthly payment and shows you the corresponding amortization schedule. If you are purchasing a home, our payment calculator allows you to test down payment and amortization scenarios, and compare variable and fixed mortgage rates. We also help you calculate CMHC insurance and land transfer tax.

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Renewal or Refinance

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Make your calculator results reality

Secure a great mortgage rate and lock in your monthly mortgage payment now.

How to estimate mortgage payments

There are a number of factors that go into estimating how much your regular mortgage payments will be. The most important numbers are the total mortgage amount (the price of the home, less the down payment, plus mortgage insurance if applicable), the amortization period (the number of years the mortgage payments will be spread across), and the mortgage rate (the rate of interest paid on the mortgage).

To use the calculator, enter the purchase price, and select your amortization period and mortgage rate. Then you can see how your payment will be affected by the size of your down payment and frequency of payments. Our calculator also shows you what the land transfer tax will be, and approximately how much cash you’ll need for closing costs. You can also use the calculator to estimate your total monthly expenses, see what your payments will be if mortgage rates go up, and show what your outstanding balance will be over time. It is a good idea to use the calculator to determine what you can afford before you start looking at real estate listings.

If you’re renewing or refinancing and know the total amount of the mortgage, use the “Renewal or Refinance” tab to estimate mortgage payments without accounting for a down payment.

How to lower your mortgage payments

There are a few ways to lower your monthly mortgage payments. You can reduce the purchase price, make a bigger down payment, extend the amortization period (if your down payment is less than 20%, the maximum is 25 years), or choose a lower mortgage rate. Use the calculator above to try different variables to see what your payment will be with different scenarios.

Frequently Asked Questions

Is your mortgage payment calculator free?

Absolutely! Our calculators, website and rate comparisons are completely free for users. Ratehub.ca earns revenue through advertising. We promote the lowest rates in each province offered by brokers, and allow them to reach customers online.

Why does your monthly calculator have four columns?

We think it’s important for you to compare your options side by side. We start the calculator by outlining the four most common options for down payment scenarios, but you are not limited to those options. We also allow you to vary amortization period as well as interest rates, so you’ll know how a variable vs. fixed mortgage rate changes your payment.

How do payments differ by province in Canada?

While majority of the mortgage regulation in Canada is consistent across the provinces (minimum down payment 5%; maximum amortization period 35 years), there are some things that do vary. This table summarizes the differences:


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What will your mortgage payment be?

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    Calculate your monthly mortgage payment using the free calculator below. A house is the largest purchase most of us will ever make so it’s important to calculate what your mortgage payment will be and how much you can afford. Estimate your monthly payments and see the effect of adding extra payments.

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    About our Mortgage Rate Tables

    About our Mortgage Rate Tables: The above mortgage loan information is provided to, or obtained by, Bankrate. Some lenders provide their mortgage loan terms to Bankrate for advertising purposes and Bankrate receives compensation from those advertisers (our “Advertisers”). Other lenders’ terms are gathered by Bankrate through its own research of available mortgage loan terms and that information is displayed in our rate table for applicable criteria. In the above table, an Advertiser listing can be identified and distinguished from other listings because it includes a “Next” button that can be used to click-through to the Advertiser’s own website or a phone number for the Advertiser.

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    Loans Above $424,100 May Have Different Loan Terms: If you are seeking a loan for more than $424,100, lenders in certain locations may be able to provide terms that are different from those shown in the table above. You should confirm your terms with the lender for your requested loan amount.

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    Mortgage Calculator Help

    Using an online mortgage calculator can help you quickly and accurately predict your monthly mortgage payment with just a few pieces of information. It can also show you the total amount of interest you’ll pay over the life of your mortgage. To use this calculator, you’ll need the following information:

    The dollar amount you expect to pay for a home.

    The down payment is money you give to the home’s seller. At least 20% down typically lets you avoid mortgage insurance.

    If you’re getting a mortgage to buy a new home, you can find this number by subtracting your down payment from the home’s price. If you’re refinancing, this number will be the outstanding balance on your mortgage.

    Mortgage Term (Years)

    This is the length of the mortgage you’re considering. For example, if you’re buying new, you may choose a mortgage loan that lasts 30 years. On the other hand, a homeowner who is refinancing may opt of a loan that lasts 15 years.

    Estimate the interest rate on a new mortgage by checking Bankrate’s mortgage rate tables for your area. Once you have a projected rate (your real-life rate may be different depending on your overall credit picture) you can plug it into the calculator.

    Mortgage Start Date

    Select the month, day and year when your mortgage payments will start.

    Mortgage Calculator: Alternative Use

    Most people use a mortgage calculator to estimate the payment on a new mortgage, but it can be used for other purposes, too. Here are some other uses:

    1. Planning to pay off your mortgage early.

    Use the “Extra payments” functionality of Bankrate’s mortgage calculator to find out how you can shorten your term and net big savings by paying extra money toward your loan’s principal each month, every year or even just one time.

    To calculate the savings, click “Show Amortization Schedule” and enter a hypothetical amount into one of the payment categories (monthly, yearly or one-time) and then click “Apply Extra Payments” to see how much interest you’ll end up paying and your new payoff date.

    2. Decide if an ARM is worth the risk.

    The lower initial interest rate of an adjustable-rate mortgage, or ARM, can be tempting. But while an ARM may be appropriate for some borrowers, others may find that the lower initial interest rate won’t cut their monthly payments as much as they think.

    To get an idea of how much you’ll really save initially, try entering the ARM interest rate into the mortgage calculator, leaving the term as 30 years. Then, compare those payments to the payments you get when you enter the rate for a conventional 30-year fixed mortgage. Doing so may confirm your initial hopes about the benefits of an ARM — or give you a reality check about whether the potential plusses of an ARM really outweigh the risks.

    3. Find out when to get rid of private mortgage insurance.

    You can use the mortgage calculator to determine when you’ll have 20 percent equity in your home. This percentage is the magic number for requesting that a lender wave private mortgage insurance requirement.

    Simply enter in the original amount of your mortgage and the date you closed, and click “Show Amortization Schedule.” Then, multiply your original mortgage amount by 0.8 and match the result to the closest number on the far-right column of the amortization table to find out when you’ll reach 20 percent equity.


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    Private mortgage insurance, or PMI: Just the basics

    Mortgage payment formula

    If your down payment on a home is less than 20%, you will have to pay for mortgage insurance.

    What is PMI?

    When you make a down payment of less than 20%, the lender requires private mortgage insurance, or PMI. The policy protects the lender from losing money if you end up in foreclosure. PMI also is required if you refinance the mortgage with less than 20% equity.

    Private mortgage insurance fees vary, depending on the size of the down payment and your credit score, from around 0.3% to about 1.5% of the original loan amount per year. Some years, PMI premiums are tax-deductible and some years they’re not, depending upon the whim of Congress.

    *Rate varies according to size of down payment, credit score and insurer.

    Source: Bankrate.com, Radian mortgage insurance calculator

    Most PMI policies require the borrower to pay monthly. Borrowers also have the option of paying for mortgage insurance with a large upfront payment.

    PMI can be canceled

    Your lender must automatically cancel PMI when your outstanding loan balance drops to 78% of the home’s original value. This probably will take several years.

    You can speed up the cancellation of mortgage insurance by keeping track of your payments. Once the loan balance reaches 80% of the home’s original value, you may ask the lender to discontinue the mortgage insurance premiums.

    To put it another way: You can request cancellation of mortgage insurance when the loan-to-value ratio drops to 80%. The lender is required to cancel private mortgage insurance when the loan-to-value ratio drops to 78%.

    Loan-to-value ratio

    The loan-to-value ratio, or LTV, describes mortgage debt as a percentage of how much the home is worth. It is a financial term used by lenders.

    Formula: Mortgage amount owed / Appraised value

    Example: Alex owes $60,000 on the mortgage. The house is worth $100,000.

    $60,000 mortgage balance / $100,000 = 0.60. This means that Alex’s loan-to-value ratio is 60%.

    We’re talking PMI, not FHA

    Recent FHA-insured loans require payment of mortgage insurance premiums for the life of the loan. FHA mortgage insurance premiums can’t be canceled. Instead, you have to refinance the loan. Read “7 crucial facts about FHA loans.”


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    Calculate Your Payments with Today’s Rates

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    Mortgage Principal Calculator

    It’s good to understand how your future looks like. Using this tool, you can determine the remaining balance of your mortgage after several of your regular mortgage payments.

    Mortgage Length Calculator

    What would your overall savings look like if you shortened the length of your mortgage by making larger payments? Take a look with our Mortgage Length Calculator.

    Loan Comparison Calculator

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    Additional Payments Calculator

    By putting more money towards you mortgage payments, you will see your mortgage reduced. Use this to calculate how mortgage prepayments affect your overall mortgage.

    Interest Only Calculator

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    Payment per Thousand Financed Calculator

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    Interest only with Additional Payments Calculator

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    From the blog.

    When you find yourself in seemingly insurmountable debt, working on building your credit score and saving money at the same time can seem like an impossible feat. As you struggle to climb to the top of the mountain of bills, it seems like a never-endin.

    Another year is here and so are the many resolutions that accompany the New Year trends. We all know that nine out of 10 times resolutions are not kept and so we end up with broken promises and a series of disappointments. When resolutions are too high.

    While several items in Canada remain to have low interest rates, one sector is on the rise. Homeowners can expect to see a rise in mortgage interest rates later in 2013. For quite some time, interest rates were staying right around 2.99% for qualified .

    MortgageCalculatorCanada.com aims to provide its users with the best mortgage tools and calculator resources on the web. We are proud to offer our customers with a complete set of mortgage analysis resources to assist them in preparing their financial futures. We recognize and value the importance of home loans and the significance such transactions can have on one’s life. We hope that our extensive set of resources and information will help you in your search for a home mortgage and a better future. Our tools take your income, budget, loan amount and payment period into consideration to provide you with personalized solutions for your mortgage.

    If you require any assistance or explanations of any of our tools, or if you’re ready to make the next move and obtain a mortgage for a home, do not hesitate to contact us. An experienced mortgage professional is ready to assist you with all of your needs.

    Canadian Mortgages: Learn the Basics

    Purchasing a home in Canada can be a complicated process, but it doesn’t have to be. Mortgage Calculator Canada recognizes and understands the difficulties homebuyers face. The information below, in conjunction with our mortgage calculator tools, will facilitate the process of understanding and applying for your mortgage.

    Variable Rates vs Fixed Rates

    The first thing you need to know about mortgages and mortgage interest rates is the difference between a variable mortgage rate and a fixed mortgage rate. A fixed mortgage rate stay constant (unchanged) through the term length of a mortgage. A variable rate fluctuates over time. As the prime rate (set by the Bank of Canada) changes, the variable rate will change with it. When the prime rate rises, a larger portion of your mortgage payment will go to interest and when the prime rate falls, a larger portion of your mortgage payment will go to principal.

    Mortgage Down Payment

    A mortgage down payment is a sum of money that is collected to put down towards the purchase of a new home. It is not required in all cases, however, in the case that it is, there is a minimum. How can a down payment affect your mortgage? Well, if you do provide a down payment, it is used to calculate the maximum price of a home you can afford, it is used to calculate the size of your mortgage and the mortgage payments, as well as the amount of CMHC insurance you have to pay. To qualify for a mortgage with no down payment, you need a credit score of at least 680.

    Open Mortgage, Closed Mortgage – What’s the difference?

    An open mortgage is a mortgage that can be paid out at any time without financial penalties. You are also able to make additional mortgage payments with no financial penalties. Typically, open mortgage terms range from 6 months to 1 year and can have either fixed or variable mortgage interest rates. On the other hand, closed mortgages have lower interest rates than open mortgages. Closed mortgage terms can range from 6 months to 10 or more years. You are not able to pay out a closed mortgage early with no penalty although with most lenders you are still allowed to pre-pay up to 20% of your original principle balance every year.


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    Bank of America Mortgage Payment

    Bank of America Mortgage Payment must be made before the expiry of your grace period. This is in order to ensure that there would not be any late fee due on you. You must know your grace period, which is different for different people, to avoid a late payment. B of A offers a number options through which you can pay our mortgage bills conveniently and well in time. The online payment option is definitely the most popular and the most advocated one because of the certain obvious advantages over other alternatives. Other options may include payment by mail, over phone and with credit card. Please note some of these options may not be available in your location and there might be some fees associated with their use.

    BAC Home Loans Servicing, LP is the servicing division for all BofA and Countrywide customers. It currently does not accept credit card and there is no separate facility to allow you to pay mortgages by phone. However, you can use the customer service number 1-800-669-6607 to get assistance in this regard. It is important to avoid late fees. You can do so by availing PayPlan Services of the bank, under which your payment is automatically deducted from your bank. Another option is to use MortgagePay on the Web, which is available 24×7, but you need to initiate a payment each month by yourself. If paying by mail, don’t wait for your payment coupon unnecessarily, if it doesn’t reach you on time. Just write your account number on the check or money order and send the same to the mailing address mentioned under payment instructions on your loan documents.

    Bank of America Online Mortgage Payment

    You need to register first in order to use this option. Enrolment is possible online as well and it takes just a few minutes to complete the process. During the process you will be asked to set up your username and password. These are necessary login information to open your account online. Once you have your own login ID, you can sign in anytime to Bank of America online banking to make payments. If you are a Countrywide Financial customer, you must have your login ID converted before you can sign in to online banking. Go to the Accounts Overview page and select the View options link visible under your home loan account section. Now you can select Pay Now link to initiate the process of online mortgage payment. Follow the instructions provided there or call the phone number 1-800-933-6262.

    Bank of America Mortgage Payment Address

    You can pay Bank of America mortgage using a conventional option as well, such as by depositing checks at a nearest branch or center, or by sending your payments via mail or Western Union. The mailing address may be different for different borrowers depending on the locations where they live. Refer to your loan documents to see details in this regard.

    The residents of Alaska, Arizona, Hawaii, California, Nevada, Idaho, Oregon, and Washington can use the following address to send payments by mail.

    Bank of America Home Loans

    Los Angeles, CA 90051-6803

    Wilmington, DE 19886-5222

    Dallas, TX 75265-0070

    Bank of America Mortgage Payoff

    The payoff balance is the amount you owe to BAC Home Loans Servicing, LP at any point of time. Depending upon your loan type, you may also incur a prepayment penalty and several other fees, such as verification of mortgage, payoff statement and expedited payoff service fee. The funds can be paid using any of the six acceptable forms, which include cashier’s checks, title company checks, certified checks, escrow company checks, attorney certified escrow checks, and wired funds.

    To wire funds, use the following details:

    Beneficiary Bank: Bank of America

    ABA Routing #: 026009593

    Beneficiary Acct Name: MRC

    Beneficiary Acct #: 12356-19173 Reference: Customer Name


    How to Calculate Your Mortgage Payment, mortgage payment formula.#Mortgage #payment #formula


    How to Calculate Your Mortgage Payment

    Mortgage payment formula

    Mortgage payment formula

    Understanding your mortgage helps you make better decisions. Instead of just taking whatever you get, it pays to look at the numbers behind any loan – especially a big loan like a home loan.

    To calculate a mortgage, you’ll need a few details about the loan. Then, you can do it all by hand or use free online calculators (or a spreadsheet) to crunch the numbers.

    Most people only focus on the monthly payment, but there are other important details that you need to pay attention to.

    We’ll start with calculating the payment, and we’ll also look at how much you pay in interest ​and how much you actually pay off – in other words, how much of your house you’ll actually own.

    The Inputs

    To calculate (and understand) the payments, gather the following information about a potential mortgage loan:

    • The loan amount (or principal)
    • The interest rate on the loan (not necessarily the APR, which also includes closing costs)
    • The number of years you have to repay (also known as the term)
    • The type of loan: fixed rate, interest only, etc.
    • The market value of the home
    • Your monthly income

    Calculations for Different Loans

    The calculation you use will depend on the type of loan you have. Most home loans are fixed-rate loans (for example, standard 30-year or 15-year mortgages).

    For those loans, the formula is:

    Loan Payment Amount / Discount Factor

    You’ll use the following values:

    • Number of Periodic Payments (n) Payments per year times number of years
    • Periodic Interest Rate (i) Annual rate divided by number of payments per
    • Discount Factor (D) <[(1 i) ^n] - 1>/ [i(1 i)^n]

    Example: assume you borrow $100,000 at 6% for 30 years to be repaid monthly. What is the monthly payment (P)?

    • D 166.7916 ( <[(1 .005)^360] - 1>/ [.005(1 .005)^360])
    • P A / D 100,000 / 166.7916 599.55

    How Much Goes Towards Interest?

    Your mortgage payment is important, but you’ll also want to know how much you lose to interest each month. A portion of each monthly payment is your interest cost, and the remainder goes towards paying down your loan (you might also have taxes and insurance included in your monthly payment).

    An amortization table can show you – month-by-month – exactly what happens with each payment. You can create an amortization table by hand, or use a free calculator or spreadsheet to do the job for you. Take a look at how much total interest you pay over the life of your loan. With that information, you can decide if you want to save money by:

    • Borrowing less
    • Paying extra each month
    • Finding a lower interest rate
    • Choosing a shorter term loan (15 years instead of 30 years, for example)

    Interest Only Loan Payment Calculation Formula

    Interest-only loans are much simpler to calculate. For better or worse, you don’t actually pay down the loan with each required payment (although you can usually pay extra each month if you want).

    Example: assume you borrow $100,000 at 6% interest-only with monthly payments.

    What is the payment (P)?

    Loan Payment Amount x (Interest Rate / 12)

    Check your math with the Interest Only Calculator.

    Your interest only payment is $500, and it will remain the same until:

    1. You make additional payments (which will reduce your loan balance – but your required payment might not change right away), or
    2. After a certain number of years you’re required to start making amortizing payments, or
    3. You make a balloon payment to pay off the loan entirely

    Figure Out How Much you Own (Equity)

    You might also want to know how much of your home you actually own. Of course, you own the home but until it’s paid off, your lender has a lien on the property so it’s not free-and-clear. The amount that’s yours – your home equity – is the home’s market value minus any outstanding loan balance.

    There are several reasons you might want to calculate your equity.

    Your loan to value (LTV) ratio is important because lenders look for a minimum ratio before approving loans. If you want to refinance or figure out how big your down payment needs to be, you need to know the LTV ratio.

    Your net worth is based on how much of your home you actually own. Having a million dollar home doesn’t do you much good if you owe $999,999 on the property.

    You can borrow against your home using second mortgages and home equity lines of credit (HELOCs). But most lenders need to see an LTV below 80% to approve a loan.

    Can you Afford the Loan?

    Lenders often offer you the largest loan that they’ll approve you for. This is typically based on their standards for an acceptable debt to income ratio. However, you don’t need to take the full amount – and it’s often a good idea to borrow less.

    Before you apply for loans, look at your monthly budget and decide how much you’re comfortable spending on a mortgage payment. After you’ve made a decision, start talking to lenders and looking at debt to income ratios. If you do it the other way around, you might start shopping for more expensive homes (and you might even buy one – which will affect your budget and leave you vulnerable to surprises). It’s better to buy less and have some wiggle room than to suffer just to keep up with payments.


    Mortgage Payment Calculator, mortgage payment estimator.#Mortgage #payment #estimator


    Mortgage Payment Calculator

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    For a $ amount mortgage at ‘rate’ %, amortization, your monthly payment will be

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    Mortgage Payment Calculator

    Thank you for taking the time to complete our mortgage calculator. Based on the information you entered, your results are illustrated in the graph and table below.

    For more information, visit us at www.scotiabank.com to locate your nearest branch or Home Financing Advisor.

    Results & Assumptions:

    Calculation results are approximations and for information purposes only and rates quoted are not considered as rate guarantees. Interest is compounded semi annually, not in advanced and fixed for the term of the mortgage, except for the UVRM Product which is compounded monthly. The calculations assume all payments are made when due. Calculations assume that the interest rate would remain constant over the entire amortization period, but actual interest rates may vary over the amortization period. Making weekly/biweekly payments will have the effect of making an extra monthly payment every year and will shorten your amortization. Some conditions apply. Your prepayment options will depend on the mortgage solution that you select.

    Amortization Schedule

    Calculation results are approximations and for information purposes only and rates quoted are not considered as rate guarantees. Interest is compounded semi annually, not in advanced and fixed for the term of the mortgage, except for the UVRM Product which is compounded monthly. The calculations assume all payments are made when due. Calculations assume that the interest rate would remain constant over the entire amortization period, but actual interest rates may vary over the amortization period. Making weekly/biweekly payments will have the effect of making an extra monthly payment every year and will shorten your amortization. Some conditions apply. Your prepayment options will depend on the mortgage solution that you select.


    4 Smart Ways to Lower Your Monthly Mortgage Payment, monthly mortgage payment.#Monthly #mortgage #payment


    4 Smart Ways to Lower Your Monthly Mortgage Payment

    Monthly mortgage payment

    If you struggle each month to make your mortgage payment, you’re not alone. Financial challenges such as a job loss, drop in household income, or major medical bills could make paying a mortgage that was once affordable a financial burden. The Federal Reserve Board reported that in the fourth quarter of 2016, 4.15 percent of residential mortgages in the United States were delinquent. (See also: 8 Signs You’re Paying Too Much for Your Mortgage)

    There is hope, though, if you are struggling to make your monthly mortgage payment. There are several steps you can take to lower the size of that payment.

    Lengthen your loan’s term

    The more years attached to your mortgage, the lower your monthly payment will be. With a longer term, your loan payments are stretched out over more years, making each monthly payment smaller.

    Consider this example: If you take out a $200,000 15-year, fixed-rate loan with an interest rate of 3.4 percent, your monthly payment, not including your taxes and homeowners insurance, will be about $1,400 a month. Say you take out that same $200,000 mortgage loan but in the form of a 30-year, fixed-rate loan with an interest rate of 4.2 percent. Your monthly payment, again not including taxes and insurance, will be just $978.

    If you are struggling to make the monthly payments on a shorter-term loan, contact your lender and ask to have your loan reamortized to one with a longer term. You won’t need to go through an official refinance to do this. But lenders will charge you a fee, one that LendingTree says averages about $250.

    Just remember, when you change your mortgage to one with a longer term, you’ll pay significantly more in interest. This extra interest which could hit $100,000 or more if you take the full term to pay off your mortgage might be an acceptable cost if it helps you avoid falling behind on your mortgage payments and possibly foreclosing.

    Refinance to a lower interest rate

    The most common way to lower your monthly payment is to refinance your existing loan into one with a lower interest rate.

    Say you originally took out a 30-year, fixed-rate mortgage of $180,000 at an interest rate of 5 percent. Your monthly payment, not counting taxes or insurance, would be about $966. Now say you owe $160,000 on that loan and you refinance that amount into a 30-year, fixed-rate mortgage loan with an interest rate of 4.2 percent. That payment would now fall to about $782 a month, a savings of about $184 a month.

    There is one big negative that comes with refinancing: You’ll have to pay fees to do it. You can expect to pay about 1.5 percent of the amount you are refinancing in closing costs. For a loan of $180,000, that comes out to $2,700 in closing costs.

    Get rid of PMI

    No homeowner enjoys paying for private mortgage insurance. This insurance, better known as PMI, protects the lender if you fail to pay your mortgage. Generally, it costs from 0.5 percent to 1 percent of your loan amount each year. So on a mortgage of $200,000, PMI can cost as much $2,000 a year, or about $166 a month.

    You only have to pay PMI if you came up with a down payment of less than 20 percent of your home’s purchase price when buying it. If you are paying PMI, you might be able to get rid of this expense, which would lower your monthly mortgage payment. You can request that your lender remove PMI once you have built at least 20 percent equity in your home. If you request this, your lender will send an appraiser to your home to determine its current market value. It will then calculate your equity to determine if you’ve hit that important 20 percent mark.

    Reassess your property taxes

    If you are like the majority of homeowners, a portion of every payment you send to your lender includes money used to pay off your property taxes. This is known as an escrow arrangement.

    Under such an arrangement, your lender estimates how much money you’ll need each year to pay your property taxes. If your lender estimates that your taxes will be $6,000 this year, it will add $500 to your monthly mortgage payment. It will then deposit that $500 into an escrow account. When your taxes are due, it will dip into this account to pay them on your behalf.

    You might be able to reduce your monthly mortgage payment by requesting a reassessment with your county tax assessor’s office or tax collector’s office. If your taxes are reassessed and they drop, your monthly mortgage payment will fall, too.