How do I calculate my mortgage payment?
Most of the time, it's not necessary or even useful to calculate your mortgage payment yourself. After all, there's a world full of mortgage calculator tools out there. But if you really want to know what goes into that calculation, this is the basic formula:
At the end of this equation is your basic mortgage payment, but just the principal and interest portion. For most homeowners, there's a lot more that's included in their monthly payment besides the P+I because of their escrow account with their bank.
Having an escrow account is incredibly convenient, but it makes your mortgage payment more than just a mortgage payment. It's also 1/12 of your tax payment, 1/12 of your insurance payment, and on and on.
Here are a few costs that are often included in your mortgage payment besides the mortgage:
To calculate your new mortgage with these additional expenses included, just click "show additional inputs" on the mortgage calculator above and add your estimated figures. It will get you a very close estimate of what to expect.
Things to know before buying a house in Mississippi
Mississippi has fairly low real estate prices, and it also has taxes to match. On average, Mississippi collects just 0.52% of a property's assessed fair market value, putting it at 43rd out of 50 states for taxes. So, if you owned a property assessed at $98,000, you'd only pay $508 per year. Of course, lower property taxes can also mean fewer services, so be sure that the county you're in offers the services you'll want before writing an offer.
Mississippi is one of the few states that hasn't become warmer due to climate change, and has actually cooled a bit. This isn't good news, though, as the state will still experience disastrous effects from overall planetary warming. For example, the sea level along the Mississippi coast is rising faster than in many areas due to the land also sinking. This may overcome wetlands and barrier islands that currently protect the communities along the ocean from rising sea water, flooding, and severe storms and hurricanes. Other parts of Mississippi may also experience more severe and frequent flooding and storms.
If your Mississippi home is along the coast, or in any part of Mississippi near a water source, flood insurance is advised along with your homeowners insurance policy. Wind coverage may also be helpful, depending on your location and the likelihood of severe storms. Ask your insurance agent what's appropriate, even if it's not required. You can also plug that number into the Mississippi mortgage calculator to help give you a better estimate of your overall payment.
Tips for first-time home buyers in Mississippi
If you're a first-time home buyer in Mississippi, you're in luck! The Mississippi Home Corporation offers several programs to help you pay for closing costs and down payments.
Smart6 Second Lien
The Smart6 Second Lien program is available to any borrower in Mississippi who intends to occupy the property and has a household income under $122,000. It provides $6,000 assistance in the form of a second lien at 0% interest. This note will have to be repaid if the property is refinanced, the primary mortgage is repaid in full, the property is sold, or the owner no longer occupies the house.
MRB7
The Mortgage Review Bond 7 (MBR7) is available for first time home buyers and provides a forgivable, deferred $7,000 10-year second mortgage at 0%. The money can be used for down payment or many approved closing costs, as long as your income qualifies. For single borrowers or families of two, that means income not to exceed $102,360, but will vary by county, and a home costing under $275,000.
Easy8
Easy8 is another due-on-sale second lien program for first-time home buyers. This one offers $8,000 with no interest, and can be used toward your home's down payment or closing costs. Unlike Smart6, you will have to complete a home buyer education program.
Trusty10
The Trusty10 program can be used by borrowers who need even more money than the other programs can offer. Unlike them, however, it's an active mortgage with a 2% interest rate repayable over 15 years. Borrowers can get $10,000 toward down payments or closing costs for their first home purchase, and must attend a home buyer education course.
DPA14
For borrowers living in Coahoma, Tunica, or Washington counties, the DPA14 program is an incredible opportunity to get into a home for very little out of pocket. It offers a total of $14,000 in assistance, half as a grant and half as a forgivable 10-year second mortgage at 0% interest. You can't spend more than $332,000 on your new home, and your income must qualify, but the money can be used for down payments or closing costs, or both.
Advice for all first-time borrowers
There are a lot of opportunities for down payment assistance in Mississippi and it's smart to try to take advantage of them if you can. But if those programs aren't right for you, or you simply don't qualify for them, you have plenty of other options. In order to qualify, though, you'll need to be the very best version of yourself as a buyer as you can be.
Here are a few things that lenders look for in potential borrowers:
- A long, traceable work history. This means at least two years on the job, or at least in the same industry, and filing taxes on that job as proof it exists. You need a job to buy a house, and a lender will make sure you do.
- Money in the bank. Sometimes, lenders need to see that you can cover a few months of mortgage payments in case things go wrong. Other times, they simply want to see that your down payment money is yours and comes from a legitimate source (a process called seasoning). Either way, keep your mortgage-related money in the bank, in a dedicated account.
- A solid credit score. You don't need a perfect credit score to buy a house, but having a good one is important. Make your payments on time, don't charge up too much of your credit, and don't take out too many credit lines, and you should be a great candidate.
- A reasonable DTI. Your debt-to-income ratio doesn't have to be zero, but it should be under about 40%, all debts considered. If you're not there yet, pay down some current debt and apply when you are.
In addition to these items, make sure to guard your credit fiercely, and once you're in the application process, don't change anything -- no changes in jobs, no new credit lines for purchases for your future home, no charging up your credit cards. Your lender will review your file one last time just before closing to make sure nothing has changed, and if it does, well, that's a pretty unpleasant experience.