Understanding How Your Mortgage Payment is Calculated

Allison Beatty
LoanBiz Columnist


There are many factors that affect the mortgage loan payment on your new home. By understanding them, you'll have a better handle on how to get the lowest mortgage payment possible.

Mortgage Financing Factors

Among the key factors that influence your mortgage payments are:

• The size of the mortgage loan.
• The interest rate. (Obviously, the lower the rate, the lower your home mortgage payments.)
• The length of the mortgage repayment term.
• The mortgage payment schedule.

The Mortgage Down Payment

The amount of your loan down payment will play a big part in determining your monthly mortgage payment. If you put 10 percent down on a $150,000 loan, for example, your monthly payment will be higher than if you put 15 to 20 percent down. You'll need to balance your desire for a low down payment with your need to keep cash aside for other home-related needs.

Focus on Mortgage Interest Rates

When shopping for a mortgage, many people focus on the interest rate. A lower interest rate allows you to borrow more money and keep the same monthly mortgage payment. This is a big benefit for those trying to stretch their funds and get into a bigger home.

Tips for Getting a Low Interest Rate:

• Shop around and compare, as not all mortgage lenders are the same. Try surfing Internet lenders' sites and phoning local mortgage companies.
• Consider options for paying for one percentage point to get a lower interest rate.
• Ask mortgage lenders about "locking in" a rate to avoid market changes.

There are many ways to determine your ideal mortgage loan payment. As you shop for mortgages and homes, remember that the interest rate, loan terms, down payment, and related fees all will play a part. Hopefully, you can balance between these variables to land the mortgage loan payment that fits your needs.

About the Author
Allison E. Beatty is a syndicated real estate writer who has been writing home improvement columns for 15 years.