How do I calculate my mortgage payment?
Calculating your mortgage payment can be kind of complicated, which is why we've built this snazzy mortgage calculator to do all the heavy lifting for you. But, if you really want to get a behind-the-scenes view, here's the basic formula:
Very few mortgage payments look like this today, as many homeowners opt to have escrow accounts that accept monthly contributions for bills like homeowners insurance and taxes, as well as other assorted home-related fees. Instead of paying these all at once, you'll contribute one-twelfth of the estimated total each month into the account and your bank will pay your taxes or your insurance at the time it's due.
A few examples of additional fees you may see included with your basic mortgage payment include:
And, unless you had a 20% down payment for your mortgage, you'll also likely be paying private mortgage insurance on your conventional loan. If you got an FHA loan, you'll pay an upfront and monthly mortgage insurance premium.
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.
Things to know before buying a house in Vermont
Vermont's real estate is close to the national median, but the taxes on those properties are near the top end. The state is 9th in the nation when it comes to property taxes, at an average rate of 1.59% of assessed fair market value. This means that if your home's value is assessed at $216,300, your taxes will be about $3,444.
The state has warmed more than twice as much on average than the rest of the United States, and this is causing serious problems with early snow melts, as well as encouraging more rain in heavy rainstorms, which causes flooding. Paradoxically, having so much available water at once can also contribute to summer and fall droughts.
While your basic homeowners insurance policy will cover most of the hazards that Vermont can throw at you, if you're near a waterway, or in an area where there has recently been flooding, you will likely be money ahead to get a flood policy for your home. Ask your insurance agent what's appropriate, even if it's not required. You can also plug that number into the Vermont mortgage calculator to help give you a better estimate of your overall payment.
Tips for first-time home buyers in Vermont
Vermont has two main programs available through Vermont Housing Finance Agency to help home buyers get into their first homes. These programs are: ASSIST and First Generation Homebuyer Program.
ASSIST down payment assistance program
The ASSIST down payment assistance program allows for up to $15,000 in down payment and closing cost assistance for borrowers who qualify. It's a second mortgage with a 0% interest rate with no payments due. You'll instead repay the loan when you sell your home, refinance, or pay off your primary mortgage.
All buyers must be first-time home buyers with less than $30,000 in combined liquid assets.
First Generation Homebuyer Program
Vermont offers an additional $15,000 grant that can be used for down payment and closing costs to borrowers who have never owned a home, and whose parents have never owned a home. This is a pure grant with no repayment requirement, and it can be combined with ASSIST funds to total $30,000 for closing costs and down payment assistance.
Advice for all first-time borrowers
Even if you don't qualify for first-time home buyer assistance in Vermont, there are plenty of other great programs that can help you get into your first home. Loans from the USDA and VA generally have no down payment requirements, and FHA and conventional loans have very low down payments.
Regardless of which program you choose, you'll need to look your very best as a potential home buyer when applying for your home mortgage. This means:
- Ensuring you've been at the same job for at least two years.
- Lowering your outstanding debt to improve your debt-to-income ratio.
- Securing your down payment and other closing money in a separate account and not touching it.
- Paying all your payments on time to maximize your credit score.
It also helps to start a fund to help cover the other expenses of homeownership, like repairs, upgrades, and unexpected costs that you may not have considered. The more prepared you are for buying, the better off your experience will be.