Mortgage Payment Projection – Your Ideal Payment

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Although the mortgage industry today is changing the way it does business, the guidelines for determining one’s ideal mortgage payment remain the same. What still matters most is that you’re comfortable with the mortgage payment you’ll be taking on each month.

How do you determine your comfort level?

Here are some issues to consider before you buy.

• How do you feel about owing money whether for purchases made using a credit card or the purchase of a new home?
• How secure is the income you generate from your place of employment?
• How much have you set aside for the down payment?
• Can you afford to have your mortgage payments increase?
• How long do you plan to live in this new home?
• Your ability to handle short-term mortgage costs.
• Your ability to manage long-term mortgage costs.

Large Down Payment, Paying Points

You do have some flexibility when negotiating mortgage terms. You’ll have a better chance coming out the winning end if you take time to understand the mortgage process. For example, it may be possible to lower future monthly mortgage payments by making a larger down payment. Paying points on your loan can lower your mortgage rate, which in turn can also lower your mortgage payment.

Low Down Payment

Putting less towards a down payment frees up cash in the short term; cash you can use immediately for household expenses. But doing so may cost more over the life of the loan if the smaller down payment means paying PMI or Private Mortgage Insurance.

When considering the amount you feel comfortable paying each month towards your mortgage, remember to consider other costs that traditionally are included as part of your mortgage. Annual costs for property tax, state tax, homeowner’s insurance, and association fees typically are prorated and collected each month along with your mortgage payment, then held in escrow. Collecting and escrowing funds monthly ensures that money will be available when the annual bills come due. And don’t forget to factor in money for home repairs and maintenance.

The bottom line is this: the ideal mortgage payment is one that sticks within your budget!