This calculator will estimate the size of a mortgage you could afford based on the size of your monthly rent payment, the downpayment you could afford, and on the anticipated property taxes and homeowner's insurance.
Accurately Calculating Your Payments
Are you currently a renter who is considering the transition to home ownership? If so, this calculator will help you to assess the financial possibilities and risks associated with this shift in monthly payments. There are many changes associated with the jump from renting to ownership, but the difference in financial responsibility and monthly payments is undoubtedly the most significant feature. The tool will take your current monthly rent payment and then take into account several anticipatory features of future home ownership in order to give you a picture of exactly how large of a mortgage you can practically afford. Give the calculator your expected interest rate that you anticipate your mortgage to come with, as well as the number of years you predict the life of your contract to last. The property taxes and annual insurance are the two final aspects of home ownership that you will have to prepare to pay for once you agree to jump onto the home owner bandwagon.
Transferring your financial relationship with your house from renting to ownership can be a significant jump, one that not only affects your finances but also incurring costs such as regular and emergency maintenance, home association fees, and more. Home ownership, despite what a commitment it may seem like in the beginning, can be one of the wisest financial moves you can make as it will save you a good percentage of your income on rent payments once the mortgage has been taken care of. When you crunch the numbers, you will find that even a twenty or thirty year mortgage will save you money in the end when compared to paying rent on a monthly basis for all those years.
Down Payments and Home Ownership
Different real estate agencies or private home sellers have differing requirements for the down payment a buyer must give out when signing the final purchasing contract. Some renters who have been paying monthly rent bills for quite some time and who are considered financially trustworthy may not have to put down any initial sum at all, while some renters will be asked to put down a 5% or even 10% figure to kick start the home buying process. Make sure you get this figure early on in the home transference process, as it will make a big difference to your wallet at the beginning of the game.
An Example Calculation
The calculator spits out three different circumstances for you to ponder when wanting to buy the house you are currently renting. At 0%, 5% and 10% required down payment percentages, the amount of the mortgage stands still at $79,550.79. Depending on what your current financial situation and savings picture looks like, this figure could be the principal amount needed for your loan. If you were to pay a 10% deposit down on the home of $8838.98, that would make the total cost of the home $88,389.77 all told. You can use this predicted number to help decide what kind of down payment you can afford, how much you will need to request from a trusted lender, and what the amortization schedule of your loan will look like over, say, a period of 20 years.