Are you looking to purchase or refinance a home in the Fairhaven, MA or surrounding areas of Massachusetts and Rhode Island, but need help determining your budget? When it comes to purchasing a home, the mortgage payment is one of the most significant expenses that you will have to consider. This is why it is essential to have a good understanding of what you can afford before entering into any home-buying negotiations. This calculator is a great "self-help" tool you can use to determine a monthly mortgage payment that works for you and ensure that you don't take on more debt than your family can handle.
How much of a home can I afford?
Mortgage Calculator MA - Definitions
Property value refers to the estimated median home price that a piece of real estate would sell for in the current market. This value is determined by several factors such as the location, size, condition, age, and features of the property. Property value is important for both buyers and sellers as it determines the fair market price for a property. For sellers, knowing the value of their property helps them to set an appropriate asking price, while buyers can use the property value to determine if they are getting a fair deal. To obtain a property value "guesstimate", consider using Zillow or reach out to Onshore Mortgage, LLC for a free automated home value analysis before buying a home in Massachusetts or Rhode Island.
A down payment is a payment made by a buyer in real estate transactions at the time of purchase. It is a percentage of the total purchase price of the property that the buyer pays upfront, while the remaining amount is financed through a mortgage loan. The amount of the down payment is typically determined by the lender and the loan product and can range from 0% to 20% of the purchase price, depending on the buyer's financial situation and creditworthiness.
The purpose of the down payment is to provide a level of security to the lender, as it reduces the risk of default by the buyer. The larger the down payment, the less risk the lender assumes, and the more favorable the terms of the mortgage loan may be. Additionally, a larger down payment can help the buyer secure a lower interest rate on the mortgage, which can result in significant savings over the life of the loan.
When a lender agrees to finance your real estate purchase or refinance, the total amount they lend is referred to as the mortgage loan amount (Mortgage Amount). This amount is the expected balance of your mortgage when it closes. However, it's important to keep in mind that other expenses associated with purchasing a property, such as closing costs, property taxes, and insurance, are not included in the mortgage loan amount.
A mortgage interest rate is a percentage that represents the cost of borrowing money to purchase a home. When you take out a mortgage, the lender charges you interest on the amount of money you borrow, which you pay back over the life of the loan. The interest rate on your mortgage can vary depending on a number of factors, including your credit score, the size of your down payment, and the length of the loan. Generally, the higher your credit score and the larger your down payment, the lower your interest rate will be. The interest rate on a mortgage can have a significant impact on how much you pay each month for your home.
Please note that the interest rate is different from the Annual Percentage Rate (APR), which includes other expenses such as mortgage insurance, and the loan origination fee and or point(s), which were paid when the mortgage was first originated. The APR is normally higher than the "Note" interest rate.
The amortization period is the length of time it will take for you to pay off the mortgage in full. Typical loan terms (amortization period) can be set to 30 years or 15 years fixed. This period is typically stated in years and can vary depending on the type of mortgage. Shorter terms such as 10, 20 and 25 years are also available. Onshore Mortgage, LLC. also offers "flex term" mortgage terms where you can pick the exact amount of years you would like to pay (example: 29,28,27 etc.)
During the amortization period, you will make regular payments to your lender that will go toward both the principal (the amount you borrowed) and the interest (the cost of borrowing that money). The amount of your payment will be calculated based on the length of your amortization period, your interest rate, and the amount borrowed. It is also important to note that the longer your amortization period, the more you'll end up paying in interest over the life of the loan. So while a longer amortization period may make your monthly payments more affordable, it could end up costing you more in the long run.
PMI stands for Private Mortgage Insurance. It is an insurance policy that lenders require borrowers to purchase when their down payment is less than 20% of the home's purchase price. The purpose of PMI is to protect the lender in case the borrower defaults on the loan. The cost of PMI varies depending on the size of the down payment and the loan product, but it typically ranges from 0.3% to 1.5% of the original loan amount per year. This amount is added to the borrower's monthly mortgage payment until the loan-to-value ratio reaches 80%, at which point the borrower can request that the PMI be removed.
It's important to note that PMI does not provide any protection for the borrower. It's solely for the lender's benefit. Therefore, borrowers should aim to save for a 20% down payment to avoid the added expense of PMI. Onshore Mortgage, LLC. has loan programs with a little as 5% down and NO monthly PMI known as "Lender Paid MI".
When it comes to paying your mortgage, you typically have a few different options for the frequency of your payments. Two of the most common options are monthly payments and bi-weekly payments. Monthly payments are just what they sound like - you make one payment per month. This payment will cover the full amount due for that month, including both principal and interest. Many people find monthly payments to be the simplest and easiest option, as they only have to worry about making one payment per month. Bi-weekly payments, on the other hand, involve making a payment every two weeks. This means you'll make 26 half payments per year instead of the standard 12 payments with monthly payments. Bi-weekly payments can be a good option for people who want to pay off their mortgage more quickly, as you'll end up making one extra payment each year.
However, it's important to note that not all lenders and not all loan products offer bi-weekly payment options.With Onshore Mortgage, LLC. Bi-weekly payments cannot be set up until after the loan closes with the lender.
Refers to your anticipated closing date.
To secure a loan, you’ll need to pay "One-Time Expenses" known as closing costs to your lender. These charges cover expenses such as your title insurance, appraisal, origination fee, processing fee, and necessary inspections before you can close.
The specific closing costs you will pay depends on several factors, including your credit score, loan amount, location, and loan product type. Remember that like your down payment, your closing costs are due when you close on your loan and take possession of your property.
Property taxes are a type of tax collected by local governments on real estate properties. These taxes are based on the assessed value of the property and are used to fund various municipal services and projects such as schools, roads, and public safety.The amount of property taxes owed on a property is determined by multiplying the assessed value of the property by the tax rate set by the local government. The assessed value is usually determined by a city or town "assessor" who considers factors such as the livable square feet, condition of the property, its location and the overall real estate market in the local area. Property taxes are usually paid annually or semi-annually and failure to pay can result in penalties and interest fees.
Homeowners Insurance is a type of insurance policy that is designed to protect homeowners from financial loss due to damages to their home or personal belongings. In other words, it provides financial coverage against damages caused by natural disasters, theft, fire, and other unforeseen events.
Homeowners insurance policies usually have two main components: property insurance and liability insurance. Property insurance covers damages to the home and personal belongings, while liability insurance provides coverage for injuries or damages caused to third parties while on the property.
When purchasing homeowners insurance, it is important to evaluate the level of coverage needed based on the value of the home and personal belongings. Premiums will also vary depending on the level of coverage and the insurance company. Your lender will require that your dwelling amount will be enough to cover at least your mortgage balance.
A Homeowners Association (HOA) fee is a fee that condo owners pay to the association responsible for maintaining and managing the common areas of the building or community. Common areas can include things like the lobby, hallways, elevators, pool, gym, and landscaping. The fee is usually paid monthly or quarterly and the amount can vary depending on the amenities and services provided by the association. The fees can cover a wide range of expenses such as utilities, insurance, repairs, maintenance, and improvements to the common areas. The purpose of HOA fees is to ensure that the property is well-maintained and that the shared spaces are kept clean and functional. It's important to note that HOA fees can also be used to cover unexpected expenses such as repairs or unforeseen emergencies.