Portland Mortgage Loan

Information for First Time Home Buyers and Refinancing

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How To Figure Out Your Monthly Mortgage Payments

When wanting to find out true mortgage payments, and a person is wanting to know what the actual mortgage payments would be and looking for 100% financing, remember to split the loan into a 80% first and a 20% second.  Lenders split the loan into this format to avoid mortgage insurance.  If the loan was one loan at 100%, it would be a very large risk for the lender, so they split the loan into two parts, one loan at 80% of the homes value, and the other loan at 20% of the homes value.  The first loan or 80%, is at a lower rate than the second because the loan is sold to two different investors.  If the house is to be foreclosed upon, the investor holding the first mortgage, will be first to obtain the money, the second investor or the 20% of the loan, is entitled to get their money second, so it is more of a risk to that investor, as other liens could be put against the house, making that investor at even more of a risk. 

Example:

Buying House For:  $275,000

80% of $275,000  (275,000x80%) = $220,000

20% of $275,000 (275,000x20%) = $55,000

Using the calculator and current rates:

$220,000 at 6.5% on a 30 year mortgage = $1390.54

$55,000 at 10.5% on a 30 year mortgage = $503.10

Total mortgage payment = $1893.64

Do Not for get to include taxes and insurance into the payment!

Taxes are $2121.00 a year and insurance is: $550.00

$176.75 a month for taxes and insurance $45.83 per month.

TOTAL EXAMPLE HOUSE PAYMENT:  $2116.22

Put the current interest rates into the calculator and input the annual taxes if known.  If not, you can delete that out of the calculator.