How do I calculate my mortgage payment?
Most of the time, it's not necessary to calculate your mortgage payment by hand, that's why we made this handy mortgage calculator. But, if you're interested in seeing how it all works behind the scenes, this is the basic formula:
Mortgage payments go beyond this calculation, though. This formula is just for your principal and interest. Other additions to your payment, like escrow account contributions for taxes, homeowners insurance, or homeowners association dues, will be on top of that. In addition, you may also need to pay for private mortgage insurance if your loan is conventional, or mortgage insurance premiums if you have an FHA loan.
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. It will get you a very close estimate of what to expect for monthly costs.
Things to know before buying a house in Wisconsin
Wisconsin homes are still inexpensive compared to the national market, but your taxes will help make up that difference quickly. Wisconsin is ranked 4th in the nation for property taxes as a percentage of property value, at 1.76% of your home's assessed fair market value. That means that if your home is assessed at $170,800, you'll pay $3,007 each year in taxes.
Significant warming due to climate change is affecting many parts of Wisconsin, leading to more and heavier rainfall, and flooding. Winters, however, are becoming shorter, which is a mixed bag for Wisconsin, since it will make living in the state more comfortable for humans, but may be devastating to wildlife, especially fish in the Great Lakes.
For most of Wisconsin, a basic homeowners insurance policy should be sufficient, but in areas close to waterways or in low-lying areas, flooding may become a serious hazard, so investing in flood insurance may well be worthwhile. Ask your insurance agent what's appropriate, even if it's not required. You can also plug that number into the Wisconsin mortgage calculator to help give you a better estimate of your overall payment.
Tips for first-time home buyers in Wisconsin
Wisconsin Housing and Economic Development Authority (WHEDA) offers two down payment and closing costs assistance programs, the WHEDA Easy Close DPA and the WHEDA Capital Access DPA.
WHEDA Easy Close DPA
The Easy Close Down Payment Assistance program is a 10-year fixed rate second mortgage that requires a monthly payment. But you can borrow up to 6% of your home's purchase price at the same rate as the home's primary mortgage and use it toward your down payment or closing costs. Income limits will apply, based on your location and household size.
WHEDA Capital Access DPA
For households with significant need, the Capital Access Down Payment Assistance program can provide up to $7,500 as a second mortgage at 0% with no payment requirement. Instead, the loan will be due when you sell your home, refinance it, or pay off your primary mortgage. As with the Easy Close DPA, you'll need to income qualify, but the requirements are much more strict.
Advice for all first-time borrowers
Even if you aren't eligible for a first-time home buyer program in Wisconsin, 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 homes. In more rural parts of Wisconsin, a USDA loan may also be a great choice.
But before you can qualify for any of these, you need to make yourself into the best borrower possible. This means maintaining continuous employment for at least two years at the same job, paying all your creditors on time, paying down debt to improve your debt-to-income ratio, and putting your down payment money in a separate account and leaving it there so it can be seasoned.
Above all else, don't take out any new credit, incur additional debt, or miss any payments between the time of your pre-approval and when you actually close on your home. There are lots of expenses related to owning a home, and you'll have time to deal with them once you actually have the keys in your hand. Too many changes to your borrower profile can result in your loan being denied when the underwriter checks you out right before closing.