How do I calculate my mortgage payment?
Calculating your mortgage payment by hand can be a tedious process, that's why we made this handy mortgage calculator. However, if you want to give it a try, the formula is below:
This equation calculates the very basic mortgage payment, made up of just your principal and interest. At one point this was generally all you had, but these days, most mortgage companies will also include additional items in your payment, like:
- Property taxes
- Homeowners insurance
- Flood insurance
- Wind insurance
- Mortgage insurance (PMI for conventional loans or MPI for FHA loans)
- Homeowners association (HOA) fees
- HOA assessments
Once you've gathered all these numbers, you can plug them into the Missouri mortgage calculator and get a pretty good idea of what your home's monthly payment will be, with your escrow account contributions included!
Things to know before buying a house in Missouri
Missouri has a below-average cost housing market, and appreciation is more steady than dramatic, making it a good place to buy and live long term. Missouri property taxes are about average for the United States. The average Missouri homeowner pays 0.91% of their home's assessed market value in property taxes each year, meaning the average home assessed at $139,700 would be subject to $1,265 in taxes.
As in many parts of the United States, the biggest impact from climate change in Missouri is likely to be flooding. The up to one degree temperature increase in the state has resulted in an increase of annual precipitation, as well as rainfall during the four wettest days of the year. Missouri is also already at a risk of tornadoes, having an average of 50 per year, but it is so far unclear how climate change may affect this.
In many parts of Missouri, especially if you're buying river- or lake-front property, you should seriously consider flood insurance, as well as wind coverage. This will be in addition to your homeowners insurance policy. Be sure to ask your insurance agent what's appropriate for your home, even if it's not required. You can also plug that number into the Missouri mortgage calculator to help give you a better estimate of your overall payment.
Tips for first-time home buyers in Missouri
The Missouri Housing Development Commission (MHDC) has two down payment assistance programs available for Missouri residents. Read on to learn more about each.
First Place
The First Place program is designed to help home buyers cover expenses like down payments and closing costs. It offers 4% of the total sales price as a fully forgivable second mortgage, provided the buyer stays in their home for the entire 10-year term of the note. Buyers must be first timers, and must qualify based on income and the cost of living in their county.
Next Step
Next Step is very similar to First Place, but is open to home buyers with higher incomes and any home buyer, not just first timers. Like the First Place program, there is no required down payment for the program, which will provide up to 4% in down payment and closing cost assistance in the form of a 10-year forgivable second mortgage. Buyers must income qualify, but their incomes can be significantly higher for this program than First Place.
Advice for all first-time borrowers
Whether you qualify for down payment and closing cost assistance in Missouri or not, you can still apply for other loans with appealing terms for first timers, like FHA loans or conventional loans. Both have low down payment requirements, making them easier to secure, and can be used to purchase a vast array of homes. In addition, many parts of Missouri are considered rural and will often qualify under USDA lending rules.
Before you approach any lender with the hopes of buying a home, you should be fully prepared by making yourself into the best buyer you can be. This means working on your credit, making sure that you have plenty of funds set aside in a dedicated bank account for closing (even if you believe you will qualify for down payment and closing cost assistance), and maintaining steady employment.
Lenders check these items not once, but at least twice, during the underwriting process to ensure nothing has changed throughout your home purchase. It's so important to guard your savings and credit during this time, since the loan isn't fully funded until very close to closing day, and can be revoked at any time before that, should the lender discover you've quit your job or taken out a new credit line that affects your debt-to-income ratio.