![]() ![]() PV returns the present value of an investment. NPER calculates the number of payment periods for an investment based on regular, constant payments and a constant interest rate. PMT calculates the payment for a loan based on constant payments and a constant interest rate. Excel formulas and budgeting templates can help you calculate the future value of your debts and investments, making it easier to figure out how long it will take for you to reach your goals. See? Not so hard. Granted, this is a simplified version of mortgage math your own results will depend on your income, debts, and other circumstances. But if there’s one thing we hope you take away from this, it’s that mortgages are nothing to fear-a little knowledge goes a long way. And if you get stuck, there’s no need to copy from your neighbor’s paper, since we have this handy mortgage calculator to help you whiz through these permutations with ease.Managing personal finances can be a challenge, especially when trying to plan your payments and savings. Which means this mortgage would most likely pass the bank’s muster with flying colors! Calculate your own DTI here. In this scenario, the debt-to-income ratio is 33%-just below the 36% cutoff. Next, divide your monthly debts by your monthly income Now, add that monthly debt to your average monthly mortgage payment of $840.25 to get your total debt owed per month: $7,630 (average debt) / 12 months = $636 debt per month Divide that by 12 to get your monthly debt: Since the average American carries an average debt of $7,630 per year, we’ll use that number. Then total up your debts-including what you owe on credit cards, auto insurance, and college loans. Remember, debt includes only items that appear on a credit report, not recurring expenses like groceries or phone bills. Divide that over 12 months to get your monthly income. ![]() To figure that out, start with your gross income (what you take home before taxes). That means your debts don’t exceed more than about one-third of your income. So, how do you know how much is too much, too little, or just right? The way they do this is by determining your debt-to-income ratio.įor most conventional loans, experts say you’ll want your DTI ratio lower than 36%. Of course, you’ll want to buy a home that you can comfortably pay for. So if you can afford it, it’s an option worth considering. ![]() But the upside is you’ll save a sizable chunk in interest over the life of your loan, and be mortgage-free in half the time. Finish in 15 years, and you’ll end up paying only $234,333.13 in interest. Granted, for a 15-year loan you’ll have to cough up more per month-$1,301.85 instead of $840.25. Over 30 years, the total you’ll fork over in interest amounts to $302,490.33!īut there are ways to lower the amount you pay in interest-like paying off your loan faster. Keep in mind, this monthly bill does not include property taxes, home insurance, HOA dues, or other home-related maintenance fees, which vary by area but are in the ballpark of a few hundred per year for a home at this price.Īlso note that the longer you stretch out your mortgage payments, the more you’ll end up paying in interest. A mortgage can be paid off in numerous ways, but one of the most typical is to stretch those payments out over 30 years-that way, you break it down into bite-size pieces. Building off the numbers above, here’s how much your average mortgage would cost per month: ![]()
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