What a Mortgage Loan Calculator will NOT tell you
Mortgage Payment CalculatorsOK. You're sitting in the privacy of your own home. You're surfing the net. You're getting the skinny on Brad and Angelina's twins, Brittany's latest escapades, all the really important things in life. Suddenly, you notice the ad on the right side of the page with the guy dancing a jig, and the ad saying you can get a home loan of $150,000 for less than $600 a month.You say to yourself, "Wow. My mortgage is for about that much, but my payments are way higher than $600." So, you take the bait. You go to their on-line mortgage calculator, plug in some numbers and find out that you could re-finance for a lot less than what you are paying now. But if you notice the little asterisk (*) on the page, it will disclose that the payment given by the on-line calculator does not include all possible fees. And these "possible" fees are more than possible, they are probable. The payment you get from the on-line mortgage payment calculator will only give you a principal and interest payment. What else is there to a loan payment? I'm glad you asked. Principal and interest is the lion's share of what you will pay each month on your mortgage, but today's loans are structured to insure that your annual real estate taxes and your home owner's insurance are paid. The way the lender insures that taxes and insurance are paid is called "escrowing". In simplest terms, that means the lender collects a little bit from you every month and sets it aside. Then, by the time your annual taxes and insurance premiums are due, there is enough built up to pay them. The "escrow" part of your payment is held in an "escrow account", and the lender will withdraw from that account every year to pay your taxes and insurance. If the lender expects your taxes to be $1200, they will collect about $100 every month. If your insurance is $600 a year, the lender will collect another $50 per month. Those two amounts add another $150 a month onto the payment you get from the on-line mortgage payment calculator. But we're still not finished with the add-ons. There is usually a third amount added onto a mortgage payment—P.M.I. (private mortgage insurance). P.M.I. is an insurance premium that you pay for your lender. It insures them that they will get paid if you, for whatever reason, default (stop paying) on your loan. For those buying a home, unless you can come up with a minimum of 20% down, you will pay P.M.I. For those who are refinancing, you must have at least 20% equity in your home in order to avoid paying P.M.I. Equity in your home is determined by the appraised value of your home compared to the amount you owe. In other words, if you are refinancing a home that appraises for $200,000, you must owe $160,000 or less in order to meet the 20% equity requirement. A good estimate for your P.M.I. premiums is about $100 per month. With escrow payments, we see that we must add a total of $250 onto the payment reflected by the on-line mortgage payment calculator. Now, you have a more accurate estimate of your total monthly mortgage payment. Simple Mortgage Payment ChartThe payments reflected on the chart below are based on a 30 year mortgage.To use the chart, find your loan amount in the first column, then use your finger to trace the line across the page until you come to the column under your expected interest rate. Your finger is resting on your estimated monthly payment. Be advised that this chart reflects estimated principal and interest payments only. Monthly escrow and P.M.I payments will most likely be added as well. Escrow and P.M.I payments can add several hundred dollars to your principal and interest payment. 
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