Mortgage Center – Calculators, Mortgage & Interest Rates, Refinancing (2024)

Assumable mortgage

Unlike a traditional mortgage, an assumable mortgage is passed directly from seller to buyer, bringing its remaining balance and interest rate with it. Only FHA, VA, and USDA mortgages can be assumed. Some eligibility requirements may apply, and down payments can often exceed 20% if a property has appreciated in value since the start of its mortgage.

Bi-weekly mortgage

A bi-weekly mortgage is a mortgage in which the borrower makes half of their monthly mortgage payment every two weeks, rather than paying the full payment amount once every month. So if you paid monthly and your monthly mortgage payment was $1,000, then for a year you would make 12 payments of $1,000 each, for a total of $12,000. But with a bi-weekly mortgage, you would make 26 payments of $500 each, for a total of $13,000 for the year. This can help the borrower pay off their mortgage loan sooner and reduces the total amount of interest paid over the life of the loan.).

Borrower

A borrower is a person who takes out a loan from a lender. For a mortgage loan, the borrower often is also referred to as the mortgagor (and the bank or lender the mortgagee).

Debt-to-income ratio

A debt-to-income ratio is a factor looked at by lenders when qualifying a borrower for a mortgage loan. The DTI is a number that lenders use to determine how well a borrower can handle their monthly debts. Your debt-to-income ratio is the number you get when you divide your monthly debt payments by your monthly gross income. Many lenders will want to see that your DTI is 36% or lower.

Down payment

A down payment is that portion of the purchase price of a home that the buyer pays upfront; usually the balance of the purchase price that is needed to buy the home is borrowed from a lender by way of a mortgage loan.

Homeowners insurance

Homeowners insurance is a type of property insurance. It protects you from damage (for example, from fire) to your home or possessions. Homeowners insurance also provides liability insurance against claims by people who might be injured due to accidents in your home or on the property.

An interest-only mortgage is a type of loan in which the borrower only pays interest on the principal balance for a set time, usually five to seven years. At the end of the interest-only period, the borrower must either pay the principal back entirely or begin making payments of both principal and interest.

Loan, and Mortgage Loan

A loan is money that is borrowed by one person or company from another, under an agreement whereby the borrower promises to re-pay the loan amount to the lender, usually plus interest. A mortgage loan is a type of loan for buying or financing real estate, where the borrower agrees that if they fail to repay the loan as promised then the lender may sell the real estate in order to recover the un-paid loan amount(s) out of the sale proceeds (in a process called foreclosure).

Loan-to-value ratio (LTV)

The loan-to-value ratio (or. LTV) is a factor looked at by lenders when qualifying a borrower for a mortgage loan. The LTV compares the amount of a loan to the value of the asset being financed: the amount you are borrowing divided by the price of the property being purchased or financed. So the LTV is 66.66% on a $300,000 house where the amount being borrowed to purchase it is $200,000 (meaning the down payment is $100,000). The lower your LTV the easier it will be to qualify for a mortgage loan. For example, many conventional loans require that your LTV be no higher than 80%. Of course, the greater your down payment amount, the better/higher your LTV will be.

Payment

A payment is an action that transfers money from one person or entity to another. Payments can be made in various ways, such as with physical currency, such as coins or bills, with a check (personal, cahiers, or otherwise) or with electronic forms of payment, such as debit or credit cards or electronic funds transfers (a transfer effected digitally, from one bank account to another).

Real estate

Real estate is land, or a parcel of land, either vacant (un-improved) or improved with structures such as a house, apartment building, commercial building, etc. Real estate, especially once it is thus “improved,” can serve as a place of business or residence and can be used to produce income, such as through renting or leasing. Real estate also can refer to a particular kind of legal interest in a land parcel (whether or not improved), such as ownership or entitlement to occupancy under a lease.

Reverse mortgage

A reverse mortgage is a type of loan that allows seniors to borrow against the value of their homes. The loan does not have to be repaid until the borrower moves, sells, or dies.

Step-by-step Guide

A step-by-step guide is a guide that takes you through the process of doing something, usually in a series of easy-to-follow, sequential steps.

The Federal Housing Administration (FHA), FHA Loan

The Federal Housing Administration (FHA) is an agency of the U.S. government. An FHA loan is a mortgage loan that is issued by banks and other commercial lenders but guaranteed by the FHA against a borrower’s default. FHA loans make home ownership more possible for borrowers than it otherwise would be through conventional mortgage loans, because an FHA loan permits relatively low down payments, limits closing costs the borrower pays, and is accessible to borrowers who have a relatively lower credit score. These features make an FHA loan particularly useful for many first-time homebuyers who have not yet saved enough for the amount of down payments that commercial lenders usually require for a conventional loan.

Veterans Affairs Department (VA), VA loan

The Veterans Affairs Department (VA) is an agency of the U.S. government. A VA loan is a mortgage loan that is available to current and former members of the military (and select military spouses), issued by banks and other commercial lenders, but guaranteed by the VA against a borrower’s default. VA loans make home ownership more possible for borrowers than it otherwise would be through conventional mortgage loans, primarily because a VA loan does not require any down payment. Additionally, interest rates offered for VA loans often turn out to be lower than those offered for conventional loans.

Mortgage Center – Calculators, Mortgage & Interest Rates, Refinancing (2024)

FAQs

How accurate are mortgage payment calculators? ›

Mortgage calculators provide general estimates based on the information you input, such as loan amount, interest rate, and loan term. While they offer a close approximation, keep in mind that actual payments may vary based on factors like taxes, insurance and interest rates.

How much would a $70,000 mortgage cost per month? ›

At the time of writing (June 2024), the average monthly repayments on a £70,000 mortgage are around £409. This is based on a capital repayment mortgage taken over 25 years, with an interest rate of 5%, which is representative of the UK market in recent months.

How to calculate if refinancing is worth it? ›

To calculate the value of refinancing your home, compare the monthly payment of your current loan to the proposed payment on the new loan. Then use an amortization schedule to compare the principal balance on your proposed loan after making the same number of payments you've currently made on your existing loan.

At what interest rate difference should you refinance? ›

As a rule of thumb, it's usually worth it to refinance if you could lower your current rate by one percent. One percentage point is a significant rate drop, and it should generate meaningful monthly savings in most cases.

Do mortgage calculators overestimate? ›

These mortgage calculators can often overestimate how much you can borrow, under-estimate how much you can borrow, or alternatively they may reject you outright even if you are a viable candidate.

Are payment calculators accurate? ›

Payment calculators are great at giving you an estimated amount that you will pay for a car. But they don't give you an exact amount. The exact amount can vary heavily if you over or underestimate the amount of interest you are paying on a car or the amount the car will cost.

How much would a mortgage be on $70,000? ›

A person making $70,000 may be able to afford a mortgage around $400,000. The mortgage amount you'll qualify for ultimately depends on your credit score, debt and current interest rates.

Can I afford a 300k house on a 70K salary? ›

If you make $70K a year, you can likely afford a new home between $290,000 and $310,000*. That translates to a monthly house payment between $2,000 and $2,500, which includes your monthly mortgage payment, taxes, and home insurance.

How much is a $2000 a month mortgage? ›

With $2,000 per month to spend on your mortgage payment, you are likely to qualify for a home with a purchase price between $250,000 to $300,000, said Matt Ward, a real estate agent in Nashville. Ward also points out that other financial factors will impact your home purchase budget.

What is a good rule of thumb for refinancing? ›

It's a good rule to refinance if you can reduce your interest rate by at least 1%. Mortgage rates naturally rise and fall. But, when the economy struggles, mortgage rates usually fall. Just because interest rates are low, though, doesn't mean it's the best choice for you to refinance.

At what point should you refinance? ›

Refinancing your mortgage could make sense for many reasons, including lowering your interest rate, taking cash out or switching to a fixed-rate mortgage. For most borrowers, the ideal time to refinance is when market rates have fallen below the rate on their current loan.

What is the current refinance rate? ›

Today's mortgage and refinance interest rates
ProductInterest RateAPR
20-Year Fixed Rate6.85%6.90%
15-Year Fixed Rate6.59%6.66%
10-Year Fixed Rate6.41%6.47%
5-1 ARM6.64%7.72%
5 more rows

How much should rates drop to refinance? ›

A rule of thumb says that you'll benefit from refinancing if the new rate is at least 1% lower than the rate you have.

How low will mortgage rates go in 2024? ›

But until the Fed sees evidence of slowing economic growth, interest rates will stay higher for longer. The 30-year fixed mortgage rate is expected to fall to the mid-6% range through the end of 2024, potentially dipping into high-5% territory by the end of 2025.

How do I get the best rate for refinancing? ›

  1. Improve your credit score. ...
  2. Compare refinance rates. ...
  3. Buy points to lower your interest rate. ...
  4. Determine which loan term is best. ...
  5. Choose a fixed interest rate. ...
  6. Consider the loan amount. ...
  7. Pay closing costs upfront.
Mar 28, 2024

How do you accurately calculate mortgage payments? ›

For example, if your interest rate is 6 percent, you would divide 0.06 by 12 to get a monthly rate of 0.005. You would then multiply this number by the amount of your loan to calculate your loan payment. If your loan amount is $100,000, you would multiply $100,000 by 0.005 for a monthly payment of $500.

Are mortgage loan estimates accurate? ›

Loan estimates are generally pretty accurate. By law, final loan costs must be within 10% of the amount shown on the LE. Mortgage rates change daily, however, so if you are getting a loan estimate from more than one lender, you'll want to try to get them all on the same day so that you're seeing an accurate comparison.

How much house can I afford if I make $70,000 a year? ›

The home price you can afford depends on your specific financial situation—your down payment, existing debts, and mortgage rate all play a role. Most experts recommend spending 25% to 36% of your gross monthly income on housing. For a $70,000 salary, that's a mortgage payment between roughly $1,450 and $2,100.

Is the affordability calculator accurate? ›

A mortgage affordability calculator will not tell you exactly how much mortgage a lender will ultimately approve you for. That's because lenders look at factors like your credit score before determining what mortgage interest rate to offer you.

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