How to Calculate Home Mortgage Rates
- 1). Calculate the mortgage amount. Subtract the estimated down payment from the purchase price of the home. For example, if a borrower is putting down 20 percent on a $200,000 property, the down payment would be $40,000, because $200,000 x .20 = $40,000. The mortgage amount would be $200,000 minus $40,000, which is $160,000.
- 2). Choose a mortgage term. Home mortgages are available in terms from 15 years to 45 years, depending on the lender. Most borrowers choose a loan term of 30 years. A longer loan term provides lower monthly payments. However, it also increases the overall cost of financing.
- 3). Find the best interest rate. Online comparison tools, such as Bank Rate, allow borrowers to find interest rates across the country. Borrowers should enter a credit rating (such as good, average or poor) to access the most accurate interest rates.
- 4). Calculate monthly payments based on the current interest rate. Use online mortgage calculators (see References). Enter the mortgage amount, mortgage term (i.e. 30 years) and interest rate. Also include the estimated start date of the mortgage. Based on this information, the calculator will provide a monthly payment amount.
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