Mortgage Company Myers Park, NC
Understanding Mortgage Calculations: A Leading Mecklenburg County Mortgage Company Explains What You Need to Know
Thinking about purchasing your first home? Looking into a refinance mortgage? Whatever your particular needs may be, if you’re looking for mortgage companies near me, you’ve come to the right place! Jet Direct Mortgage, a leading Mecklenburg County mortgage company, has helped countless residents throughout the Myers Park, NC area finds the right financing options at the most affordable rates possible. When you work with a mortgage broker from our firm, you can have confidence knowing that you’ll be working with one of the most trusted mortgage companies in the region.
Whether you’re a first-time homebuyer or you already have a mortgage and you want to refinance, trying to figure out how much you can afford to spend can be complicated. It goes without saying that you don’t want to spend more than you can comfortably afford, otherwise you could end up in serious financial trouble down the line. So, how do you go about determining mortgage calculations? Below, we share some helpful insight that could help you determine how much you can comfortably afford to spend on one of your biggest expenses.
Calculating Mortgage Payments
When it comes to determining how much you can spend on a mortgage, you don’t want to just hope for the best; you want to make a sound financial decision. Calculating your mortgage can help you do just that. But how do mortgage calculations work? What factors are taken into consideration when determining the final number?
In order to estimate your monthly mortgage payment, you need to collect some information about the loan. Once you have that information, you can then use a free online mortgage calculator or crunch the numbers on your own. Here’s a breakdown of the information you’ll need:
- The principal balance or the total amount of the loan. This includes the purchase price of the home, less the down payment; however, do note that some other charges may be added into this part of the equation (a reputable mortgage broker can help you determine if there are any additional charges that will affect your loan.)
- The interest rate of the loan.
- The term of the loan (the number of years you’ll have to repay it.)
- The type of loan you’re taking out; a fixed-rate, adjustable-rate, or interest-only loan, for example.
- The total market value of the property.
- Your total monthly income.
Formula Used for Mortgage Calculations
Once you have the above-mentioned information, you can then calculate your loan. You can use the following formula to calculate your mortgage payment:
M = P [i(1 + i)^n] / [ (1+i)^n -1]
The variables that you can plug into the above equation are as follows:
- M = the monthly payment for the mortgage
- P = the principal amount of the loan
- i = the monthly interest rate. Do note that interest rates are usually listed as annual figures, which means that you’ll have to divide the number by 12 (which represents 12 months of the year). As an example, if your interest rate were 6%, then your monthly interest rate would be as follows: 0.06/12= 0.005.
- n = the total number of payments over the term of the loan, or the total amount of the loan. So, if you were to take out a 20-year fixed-rate loan, “n” in the above equation would equal “20”, or 20 years x 12 months for each of the 20 years of the loan, or a total of 240 payments.
Using this formula can help you determine how much you can afford to spend on a house. Remember, you don’t want to spend more than you can comfortably afford, otherwise you could end up in serious financial trouble down the road. Not a mathematician? Speak with a lender from a reputable mortgage company and they’ll help you crunch the numbers.
Why Mortgage Calculations are Important
It’s important to calculate your mortgage payment so that you can determine how much you’ll be spending on one of the biggest investments you’ll ever make: your home. Calculating your mortgage payment can also help you figure out other important factors, such as:
- How long of a term is right for your needs. For example, while taking out a 30-year loan with a fixed interest rate over the life of the loan will make your monthly payments lower, you’ll pay more over the life of the loan, as the interest rates will be higher. On the other hand, if you were to take out a 20-year loan with a fixed interest rate, your monthly payments would be higher, but your interest rates would be lower.
- Whether or not an adjustable-rate mortgage is right for you. With an adjustable-rate loan, the interest rate is lower in the beginning, but over time, the rate either increases or decreases. If you only plan on holding the mortgage for a few years, an adjustable-rate mortgage may be a good option for you.
- How much you should put down on the property. Today, minimum down payments can be as low as 3%. However, while it might be tempting to put the least amount down, the lower the down payment, the higher your monthly mortgage payment will be. Calculating your mortgage payment can help you determine how much you should put down so you can get a monthly payment that you can comfortably afford.
For Help with Mortgage Calculations, Contact Jet Direct Mortgage Today!
Need further assistance calculating the mortgage payment on your first home? Want to find the best refinance mortgage rate today? Contact Jet Direct Mortgage, a leading Mecklenburg County mortgage company. Our team of experts will help you calculate and secure the most affordable mortgage for your needs. For more information or to schedule a consultation, give us a call at 855-553-4732 today. We look forward to hearing from you and helping you find the most affordable mortgage payment possible.