How do I calculate my mortgage payment?
Calculating your mortgage payment by hand can be complicated, so most people choose to use a mortgage calculator like this one. But, if you're financially curious, the formula looks like this:
Although this isn't too complicated, most mortgage payments also include principal, interest, real estate taxes, and homeowners insurance. This version of the mortgage payment is commonly called PITI. In addition, extra fees like homeowners association (HOA) assessments are also sometimes included in the mortgage payment, as is optional insurance for natural disasters like flooding.
In addition, if you have a smaller than 20% down payment like most Americans, you will likely also have to pay for mortgage insurance, such as private mortgage insurance (PMI) on a conventional loan. If you get an FHA loan, you'll owe a mortgage insurance premium (MIP) upfront and every month. When required, these are also included in your monthly mortgage payment.
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. This will give you a very close estimate of what to expect.
Things to know before buying a house in West Virginia
West Virginia still has pretty reasonable real estate prices, though it is experiencing higher-than-average price appreciation. Fortunately, it still has some of the lowest real estate taxes in the country. Ranking 46th in the nation, with property tax rates of just 0.49%, you can buy a lot of house and not pay a lot of tax in the state. If your home was assessed at $94,500, you'll only pay $464 in taxes per year.
So far, West Virginia is one state that has not seen huge effects from climate change. Although its temperature has increased, it's increased less than most of the United States. It is experiencing increased average precipitation in winter and spring, and earlier than usual snow melts, which will ultimately lead to both flooding and drought, but these issues are limited and are less severe than in other states. There is no guarantee that this trend will continue, however.
For most of West Virginia, a basic homeowners insurance policy should be plenty of coverage. But if you live near a waterway, adding flood insurance might help prevent bigger problems down the road. Ask your insurance agent what's appropriate, even if it's not required. You can also plug that number into the West Virginia mortgage calculator to help give you a better estimate of your overall payment.
Tips for first-time home buyers in West Virginia
West Virginia offers down payment and closing cost assistance through the West Virginia Housing Development Fund. There is only one program available at this time, called the Low Down Home Loan. This is a 15-year second mortgage of up to $8,000 at 2% interest. You'll have to pay it back, but if you don't have a better way to come up with the money you need, this program can make homeownership happen for your family.
Advice for all first-time borrowers
Whether you qualify for first-time home buyer assistance in West Virginia 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 on a vast array of home purchases.
Before you apply for your home mortgage, make sure that you're showing the lender the very best version of yourself possible. This will not only increase your odds of being approved at all, it'll help you score better rates on both your mortgage and PMI, if applicable.
A great home buyer has:
- Consistent and lengthy employment history of at least two years at the same company, in the same industry.
- A track record of on-time payments and no current collection activity.
- Low debt, leading to a lower debt-to-income ratio, which lenders love.
- Closing funds tucked away in a dedicated account so they can be verified and seasoned.
You'll also do yourself a huge favor by not making any significant financial moves until your home has completely closed. Lenders want to be sure you are ready for the expenses of homeownership, so they check your borrowing profile multiple times throughout the process.
Just because you have a pre-approval and closing day is approaching doesn't mean the lender won't check your stats again just to be sure nothing has changed. Refrain from borrowing more money, charging anything to your credit lines, or changing jobs until after your closing is completed and you've got the keys to your new home.