The most important consideration when buying a new Dayton home is affordability. As a rule, mortgage payments should not exceed 25-30 percent of your monthly take-home pay. The best way to know what you can afford is to determine the payment range by speaking with a Dayton REALTOR such as Greg Greenwald, http://www.greggreenwald.com or a mortgage loan officer.
Determining How Much You Want To Borrow
A first step to calculating your monthly mortgage payment is knowing how much you want to borrow. This can be determined by subtracting your down payment amount from the purchase price of the home, which will give you the amount that you will need to request from a lender. Keep in mind that there are occasions where you can finance your closing costs.
Know The Interest Rates
The second step is to know the current interest rates to purchase your Dayton home. Rates can change often, so check with your mortgage lender for current rates. Interest rates will adjust based on your credit history. At the time of this article, your credit should be in the 640 range or higher. Try to understand where your credit stands before you go shopping incase any corrections are necessary.
Choose The Length Of Your Mortgage Laon
Your monthly mortgage payments will be determined by a number of factors, including the term of your loan. If you were to borrow $200,000, your monthly payments would be less with a 30-year mortgage than with a 15-year mortgage. The reason is because it would take larger monthly payments to get the loan paid off quicker with a 15 year mortgage, which is why you will need to select a loan term before calculating your payments. Look at the price point of Dayton REALTOR Listings and neighborhoods prior to making this decision.
Additional Mortgage Payment Costs To Consider
Your total mortgage payment will include taxes, homeowner's insurance and possibly even private mortgage insurance (PMI) if you provide less than 20 percent down and your loan requires it.
Understanding Your Options
Now that you know how much you need to borrow, have chosen your loan term and are familiar with the current interest rates, it's time to calculate your payment. Most lenders offer a mortgage calculator on their Web site or you can get an estimate by speaking with your lender.
If you need help calculating your potential Dayton Home's monthly mortgage payments, don't hesitate to ask your Dayton REALTOR®, mortgage broker or lender.
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About Greg Greenwald: Greg is a Realtor with Prudential One in Troy, Ohio. He's a member of GDREIA (Greater Dayton Real Estate Investors Association)