Mortgage Payment Calculator
How to find out Mortgage Payments Without a Mortgage Calculator
In today's world, taking out a mortgage is required for anyone wishing to invest in property or simply want to put a roof over their heads. Normally, to find out what a mortgage payment will be on a particular property, a potential buyer needs to contact a realtor or bank to obtain a quote.
By contacting either one, buyer risks harassment from a realtor who will not let go of a qualified buyer or a lender who must borrow mortgage money to stay in business. Any buyer in his right mind would just go one of these vendors when he's ready to go full speed toward a closing.
So what makes a person who is in the early thinking stages of buying a home do? How can you know what the payment will be in a house a seller asking $ 250,000 for when the bank is advertising 30-year Mortgages 7%?
By the end of this article you will be making such a calculation in your head. You will be sprouting out the answer to complicated home buying process scenarios just as fast as you can find the terms on mortgages and the price of the house.
$ 66.53 one month
First, remember this: $ 10.000 borrowed for 30 years at 7% would require a monthly payment of $ 66.53. So it goes without saying $ 100,000 for 30 years at 7% requires a monthly payment of $ 665.30. Also note you could figure out on a piece of paper with a pencil, $ 50,000 for 30 years at 7% is $ 332.65.
Knowing these numbers you automatically know a $ 250,000 mortgage at 7% in 30 years will require a payment of $ 665.30 (for $ 100,000) and another $ 665.30 (for the next $ 100,000) and $ 332.65 (for $ 50,000). This means that payment will be $ 1,663.25, or really, really close. A mortgage calculator gives answers as $ 1,663.26, but for a wild guess, I'll take it.
A 6% or 8% Mortgage
Of course, here you ask, "What if I find a mortgage with a lower interest rate? "Well in that case, remember this, $ 10,000 borrowed for 30 years at 6% costs the borrower $ 59.96 a month. That means a $ 1,000,000 mortgage in 30 years at 6% would be 100 times $ 59.96 or a monthly payment of $ 5,996.00. Now, certainly, that was easy. All we had to do was add 2 zeros!
Okay, what if the interest rate is 8%? Here a 30-year mortgage for $ 10,000 is $ 73.38 per month. So a $ 300,000 mortgage comes at a price of 30 times, or $ 2,201.40 per month.
How about a 71 / 4% Mortgage?
In reality, most times the interest not just 6 or 7; or 8%. Even when this is the case, you still do not need a mortgage calculator. If you read about a 30-year $ 260.000 mortgage at 71 / 4%, for example, and you will know what the monthly payment will be, here's what you do. Are you ready? Guess!
That's right! Just guess! You know 7% will cost you $ 66.53 per $ 10,000 a month and 8% will cost $ 73.38 per $ 10,000 a month. You also know 71 / 4 is a place on the lower side between 7 and 8, so take a guess how much 71 / 4% will cost per $ 10,000 a month. My guess would be maybe $ 68.50?
I would go with it. So when it is a $ 260.000 mortgage we are trying to find payment, we will multiply 26 (260,000 / 10,000) X $ 68.50. The answer: $ 1,781.
When I run $ 260.000 on 71 / 4% in 30 years through a mortgage payment calculator the answer comes out $ 1,773.66. So our response was not exactly right but it was pretty close.
In a case like this, even though we came out with an answer that is $ 20 – $ 30 off, who cares? Before the actual mortgage payment is determined, the price of a homeowner's insurance policy and property taxes must be calculated yet. Then they can just anyone do at this point is guess.
There you have it. Now you are a human calculator! As long as you are only interested in 30-year mortgages, and today interest rates are 6% to 8%, you can figure out mortgage payments your head, or maybe with just a little help from a calculator. Congratulations!
About the Author
The author, Ed Lathrop has developed a Website where you can print out a mortgage payment table showing monthly payments for hundreds of different combinations of interest rates and borrowed amounts at: House Payment Chart. Find out how to get your amortization schedule and use it to save big money at: Amortization Schedules Free. These sites are not owned by any lender!