How do I calculate my mortgage payment?
First off, you don't need to know how to calculate your mortgage payment manually (unless you're reading this for a mathematics course of some kind). We have an excellent Oregon mortgage calculator in this article that can do the hard work for you.
Having said that, you can calculate your mortgage payment by hand, so we'll go through how it works. Before we get to the formula, here are the three variables you'll need to know.
Principal (P)
In lending, principal refers to the original amount you borrowed, not the current loan balance or the selling price of the house. If you took out a mortgage loan for $400,000, that's what you should use. Additionally, if you rolled any of your origination fees or closing costs into your loan (most common with FHA loans), don't forget to include them as well.
Interest rate (r)
For the purposes of calculating your mortgage payment, you'll need to use your loan's interest rate on a monthly basis. This is because you're calculating how much you'll need to pay each month toward your mortgage. To find this, start with your loan's nominal interest rate (not the APR), expressed as a decimal -- so 5% would be 0.05. Then divide it by 12 to find the number you'll use in the formula.
Be sure to check with the best mortgage lenders to find the best rate for your mortgage.
Learn more: What Is a Fixed Rate Mortgage?
Number of months (n)
To determine the number of months in your mortgage term, simply take the number of years and multiply by 12. For 15- and 30-year mortgage loans, you'll use 180 and 360, respectively.
Without further delay, here's the formula you'll use along with these three variables to calculate your mortgage payment.
It's worth noting that the payment calculated by this formula is only the principal and interest you'll have to pay each month. Virtually all residential mortgage lenders require borrowers to pay a prorated amount of their annual property taxes and insurance along with their monthly payments, so if you're calculating it by hand, don't forget to add one-twelfth of each of those expenses. And if your home has an HOA fee attached to it, be sure to include it in your monthly housing expenses as well.
Learn more: How Do Down Payments Work?
Things to know before buying a house in Oregon
Before entering a purchase contract on a home in Oregon, there are a few things to keep in mind. Not all of these are Oregon-specific, but all are worth knowing, especially if you've never been through the home-buying process before.
Oregon property taxes
Oregon's property taxes on real estate are right in the middle of the pack, ranking 26 out of 50, according to Tax-Rates.org. The average Oregon homeowner pays 0.87% of their property's assessed fair market value in taxes annually, so on a $500,000 home, this translates to a property tax bill of $4,350. Of course, property taxes can vary quite a bit within a state, but generally speaking, Oregon isn't a high- or low-tax state.
Oregon homeowners insurance
Here's a bit of good news. According to Insurance.com, Oregon is one of the cheapest states in the nation when it comes to insuring a home. The average homeowner's insurance premium for $500k in dwelling coverage with a $1,000 deductible is $3,072, which is 150% lower than the national average. This can vary significantly depending on the condition and features of the property, but homeowner's insurance rates in Oregon tend to be significantly lower than you'll find elsewhere.
Credit score requirements
Before you can qualify for a mortgage, you'll need to show you have a stable employment history, as well as enough income to justify the loan. And you'll also need to meet the lender's credit scoring standards for the type of mortgage you're applying for. This is typically a 580 for a low-down-payment FHA loan, or a 620 for a conventional loan, but the requirements can vary by lender.
Rental restrictions
In many areas, there are restrictions that govern the rental of homes, especially on a short-term basis. If you're shopping for an investment property, second home, or simply want the ability to list your home on Airbnb or a similar platform when you're not there, be sure to look into local rental laws before you buy.
Learn more: Home buyer checklist
Tips for first-time home buyers in Oregon
Like many other states, Oregon offers a program designed to help first-time home buyers afford homes, the Oregon Bond Residential Loan Program. To qualify, you need to be a first-time buyer, use a participating lender, complete a home buyer education course, and have an income below the maximums set for the loan program.
Borrowers can receive up to 100% of their down payment, closing costs, prepaids, upfront mortgage insurance premium, and other loan fees from the Flex Lending program in the form of a second mortgage, which may be forgivable if you qualify.
Check out the Oregon Housing and Community Services (OHCS) website for the most current information on these loan programs.
Read more: Best mortgage lenders for first-time home buyers
Still have questions?
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