Using Mortgage Calculators
After determining your home buying budget and have added up your monthly expenditures and subtracted that amount from your monthly net income. Now you know how much you can afford to put toward a mortgage payment each month, approximately. You can now “reverse engineer” the asking price of a particular
house to see if it’s affordable for you. Mortgage calculators make this quick and easy.
You can use one of these calculators to break down the price of a home into monthly
Mortgage payments. You can even factor in the type of down payment you have, as well as the interest rate on the loan. Of course, you won’t know the exact interest rate until you start getting quotes / offers from lenders. But you can use the mortgage calculator with average interest rates, and that will give you a general idea of the monthly payment.
You can find a free mortgage calculators on our website http://www.feltopproperties.com, or you can do a Google search for the phrase. Most banking, lending and financial services websites offer these tools as well.
To determine your mortgage comfort-zone, you need three things: a budget, a price and a mortgage calculator. For the price, just start with the cost of a house you think you might be interested in buying. We’re just experimenting here. At first, don’t worry about whether the price is too high — you’ll find that out soon enough when you run the numbers. Next, run the home price through a mortgage calculator, using the current average interest rates and a 30-year fixed mortgage. You might choose a different mortgage type later on; but this exercise is just to get a ballpark mortgage payment based on home price, so choose the 30-year fixed option for the sake of simplicity.
Sample Mortgage Calculation
Let’s say I’ve done some research, and I’ve found that a home in my preferred area with the number of rooms I want comes to about Kshs. 200,000. I plan to get a loan for 80 percent of this amount and make a down payment for the remaining 20 percent. I want to find out what my mortgage payment would be on Kshs. 160,000 (80% of the home price of Kshs.200,000). So I find a mortgage calculator to run the numbers. For the “principal” amount, I enter Kshs. 160,000. For “interest rate,” I enter for example 5.75%, which is the average rate at the time of this writing. Most mortgage calculators will have this
field filled in for you, based on current rates. For “number of years” I put 30.
Remember, we’re just trying to get a ballpark monthly mortgage payment. There are many different loan types to choose from, but for demonstrations purposes we’ve chosen a common type of mortgage (30-year fixed).
I hit the “Calculate” button, and this is what I get:
Your Monthly Payment for 30 Years
for an Interest Rate of 5.75 %
on a Loan Amount of Kshs. 160,000:
Kshs. 933.72 a Month
I would run these numbers through at least one more calculator, just to validate them. Now I can more accurately figure this price range into my budget — a quick and easy way to see if I’m in my comfort zone, and to find out exactly what my comfort zone is in the first place.
We will talk more about mortgages in our next articles.
Other topics you can check on
House Hunting for Beginners – 10 Steps to Success
What you need to know when selling your home
Mortgage tips
For inquiries or suggestions, contact us
3bedroom furnished Beach Villas to let South Coast 
Feltop Properties 