When you take out a mortgage loan, you are pledging your home as collateral to the mortgage provider, which is most commonly a mortgage banker, a commercial bank or a credit union. The provider lends you money purchase a home and in return you agree to repay the loan over a period of time including interest. The down payment is typically 20% of the sales price, and the term is 15 or 30 years at various interest rates.
Although lenders will let you know what your monthly payment will be, only you know what you’ll be able to comfortably afford to pay each month. Keep in mind that your monthly payment will also include home insurance and taxes. Should you default on the monthly payments, the lender will put a lien on your home.
Determine what you can Borrow
Use the below Mortgage Calculator to determine what you’ll pay in Principal, Interest, Taxes and Insurance (PITI). The inputs are the home sale price, loan term, down payment percentage, the loan interest rate, and annual property taxes. The calculator automatically factors in Private Mortgage Insurance (PMI) for loans where the down payment is less than 20% and adds in the monthly property taxes. You can do what-if analysis to determine the effect of changes in the home sale price, loan term, down payment percentage, and loan interest rate have on the monthly payment.