VA Loan: For eligible veterans, active-duty service members and some members of the National Guard and Reserve, the VA Loan program offers mortgages with no down payment and competitive interest rates. These loans require a lower minimum down payment and have more lenient credit requirements than conventional loans. ARMs can offer lower initial interest rates than fixed-rate mortgages, but they carry the risk of the rate (and your monthly payment) increasing in the future.įederal Housing Administration (FHA) Loan: Backed by the Federal Housing Administration, FHA loans are designed for borrowers with low to moderate incomes. FRMs are ideal for those who plan to stay in their home long-term since they offer stability in monthly payments.Īdjustable-Rate Mortgage (ARM): With an ARM, the interest rate is fixed for an initial period (typically, five, seven or 10 years) and then adjusts periodically based on a specific index. These loans are typically available in 15, 20 or 30-year terms. The following are some of the most common mortgage options available:įixed-Rate Mortgage (FRM): The most traditional type of mortgage, an FRM has a constant interest rate and monthly payments that never change. Understanding the different types of home loans that are available can be enormously helpful when you're in the market for a new home or looking to refinance your current one. I = Monthly interest rate (your annual interest rate divided by 12) n = Number of payments (loan term in years multiplied by 12 months) P = Principal loan amount (with a negative number representing the amount borrowed) You can also use the PMT formula in Excel or Google Sheets to calculator your P&I payment: M = Monthly mortgage payment P = Principal loan amount (the amount you borrowed) i= Monthly interest rate (your annual interest rate divided by 12) n = Number of months required to repay the loan (loan term in years multiplied by 12)Ĭalculating Using Microsoft Excel or Google Sheets: Use the following formula to calculate your monthly mortgage payment: Here’s a breakdown of how to calculate your monthly mortgage payment using various methods:Ĭalculating by Hand Using the Mortgage Payment Formula: While online mortgage calculators are go-to tools for most people looking to find out their principal and interest (P&I) payment, knowing how to calculate this yourself can provide you with deeper insight into your home loan. GEEK OUT: EQUATION TO CALCULATE MORTGAGE PAYMENTS
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