This may be news to you, but the millions of mortgage calculators you can find online aren’t all created equal. Whether it’s the questions they ask, their interest rates, or their calculations in giving you a monthly payment, they’re all different in one way or another. One thing most will not do, though, is calculate your private mortgage insurance, or PMI.
To further illustrate this point, I recently spoke to a client whose agent had done a calculation for her straight from his phone, and the mortgage payment his calculator arrived at was $1,600. For my part, I adjusted the pre-approval letter for her and told her what her estimated payment would be in order to close. **Even with the exact same interest rate as what her agent used, my estimate came out to be $150 more. **
Most calculators you find online will use a calculation of 1.25% of the purchase price of the home for the annual taxes and will, in turn, amortize that monthly. Knowing this, I pulled the property tax bills and used the exact taxes. Better still, I was able to quote her PMI at a lower rate.
This calculator wasn’t factoring in HOA dues, and for this client, they were $50 a month, nor had it taken her PMI into account because she wasn’t putting 20% down. My client liked the sound of a $1,600 payment and was excited to make an offer, but when she learned that the payment would be over $1,700, it gave her pause.
If you’re shopping for homes, make sure you talk with your local lender and don’t rely so heavily on the internet or your Realtor partner to do all the mortgage payment calculations for you. Doing so will keep you from enduring any unpleasant surprises during this stage of the process.
If you have any questions related to today’s topic or about the mortgage loan process in general, please don’t hesitate to reach out to me or my team at 352-242-1535. We’d love to help however we can!