Mortgage Payment: Figure a Mortgage Payment for Your New Home

21. Nov, 2011 0 Comments

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A mortgage payment calculator is the first thing most people search for when considering refinancing a mortgage, or buying a new home. Using a mortgage calculator, you can apply today’s interest rate to the amount of your new mortgage, and find out what your new monthly mortgage payment will be.

Covering the repayments of your mortgage each month is essential if you are to remain in the property. If you get behind on your mortgage and into arrears then you are looking at the lender taking you to court to seek repossession of your home. Even a single missed payment would be enough for the lender to contact you and you would have to come to an agreement with them to catch up, if you cannot repossession will be imminent.

You may find that your spreadsheet software has a function which will calculate monthly payments for a mortgage, although in most cases an online mortgage calculator is easier to find – and simpler to use! The next question ir consider is whether the new monthly payment is affordable. As a rule of thumb, your mortgage repayment should amount to no more than a third of your after-tax income. This will ensure that your payment is affordable.

If the new monthly mortgage figure comes out to be more than a third of your after-tax income, you will need to reconsider your purchase, or find a better interest rate. You can use the mortgage calculator to work out how much you can afford to borrow. Simply enter the interest rate and term of the loan, and then adjust the amount of the principal until the mortgage calculator shows a monthly payment equal to one third of your after-tax income. Combine that figure with any down payment or equity you have available to calculate the total price you can afford to pay for your new home.

Despite the initially overwhelming cost, remember that your home is the most important investment you can make. If you are armed with the right knowledge, then you would know how to properly budget your family income to make way for your monthly mortgage repayments. That said, good luck with your new home!

Learn more about Obama Mortgage Relief Plan Qualifications.

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