As a loan officer, one of the most tedious tasks we have is calculating monthly payments. Not too bad when you think about it, however take one borrower who wants to see 50 homes and they want you to price out each home BEFORE going to see it. Sadly, with taxes varying, there isn’t an easier way to calculate it.
The conversation usually looks like this:
Me (Loan officer): Your payment will be approximately $1,756 (with me guessing $120 per month on your homeowners insurance).
Borrower: I thought it would be $1,375.
Me: (Long Pause). I’m assuming you are looking at a calculator online.
Borrower: Yes, it says $1,375.
Me: Well if you click the little MORE INFO or the teeny tiny I or the How I CAME UP WITH THIS CRAZY NUMBER BUTTON (okay you get it), you will see that this is with an 800 credit score, 20% down (so no mortgage insurance) oh and there is no homeowners insurance in there either. Would you like to put 20% down?
Borrower: Oh that makes sense. That’s too high.
I truthfully have NO problem pricing out a loan for someone. In fact, I would RATHER do it than you trying to guess and being off after you put in an offer. Any calculator worth it though, should let you calculate your principal and interest, taxes, insurance, mortgage insurance and home owners association dues if you have them.
How I Calculate Your Payment
First, I ask you to give me the asking price (Say $260,000). I usually then add seller paid closing costs (as most of the time, you ask for them and don’t realize you are) (So I add $7,500). I then can put that number in and (with your credit score) I can calculate your approximate principal and interest. Assuming the rate doesn’t change and the loan amount doesn’t change ($267,500), your principal and interest on any home for that amount WILL NOT CHANGE.
Second, I have you give me the address or MLS number. That allows me to look up the TRUE taxes (annual) and then I divide by 12. To get your monthly taxes. This also allows me to see if you have any home owners association dues to add in.
Third, I guess on your homeowners insurance. Sadly some people don’t know that this number can change and make a HUGE difference.
Fourth, I get a mortgage insurance quote (depending on if you are conventional, FHA, etc.).
Last I give you the final amount. In which you cringe (if you are looking at that lovely calculator that you don’t quite know what it means) or it is about what you expected.
After pricing about 10-15 homes, I promise you will start to see and be able to feel out what monthly mortgage payment you will be around. You will see the difference taxes make and you will also see the difference in places with homeowners association dues and those without. If you don’t, don’t worry. I am always an email away!
Want to start the process today? Click HERE!
Feel free to email me with any additional questions as well!
Laura Mendele
Loan Officer
6800 France Ave South
Suite #530
Edina, MN 55435
NMLS #1451908
Direct: (612) 404-1457
Cell (763)350-6507
e-fax (612) 928-2001