What Do You Want to Spend?

A great way to really know what you want to spend on a home, even before you talk to a loan officer is a mortgage calculator. You may be surprised at how low the payment is for the home you love on Zillow.

Sometimes these calculators can be intimidating when you don’t know what to put in each block. So here are some suggestions:

• Home Value is the Purchase Price

• Loan Amount is the Purchase Price minus the downpayment (safe calculations of downpayment of 3.5% or 5% of the purchase price). So for a $100,000 purchase price, the 3.5% downpayment is 3,500 so the Loan amount is $96,500.

• Interest Rate this varies on the market, so talking to a lender is helpful, but try 4.5% as a median.

• Loan Term for a single family home is typically 30 years. You could also do 15 years to pay off the loan more quickly but that does increase your monthly payment.

• Start Date this is when your loan would begin.

• Property Tax is very low in Montgomery, great news for your monthly payment, so a reasonable estimate for Montgomery and surrounding area is .5% or 1% of the purchase price.

• PMI or MIP is mortgage insurance, it is usually placed on loans that have down-payments lower than 20%. A safe estimate is .5% but that can vary per loan type, so always check with your lender.