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Most Atlanta home buyers are looking at one thing when it comes to their mortgage loans:
How much is my monthly mortgage payment going to be?
This really is a very important factor to consider. It will vary greatly from loan to loan and borrower to borrower. It would be impossible for us to say what the average monthly mortgage payment in Atlanta is. However, we can tell you everything that goes into determining what your mortgage payment will be. This will help provide you with some perspective as you prepare to apply for your mortgage loan.
The first step to getting your mortgage is finding out how much you can afford. Take less than 30 seconds and get your custom rate quote. It includes rate options, as well as down payment and closing cost options. Get started now for FREE.
Type of Mortgage Loan
The first factor to consider is what type of home loan you are getting. There are numerous mortgage loan programs, and all have their pros and cons. Refinance loans are treated differently than new purchases. You have FHA loans that allow borrowers to qualify with lower credit scores and lower down payments.
Then, there are VA loans, which offer zero-down-payment options specifically for active-duty military personnel, veterans and surviving spouses who meet certain qualification standards. There are jumbo loans and conventional home loans. Lastly, there are USDA loans available to low-to-medium income borrowers in rural areas. The type of loan you qualify for will determine your minimum down payment, as well as your mortgage rate.
The interest rate you are paying on your mortgage loan is really the biggest variable when it comes to determining your monthly mortgage payment. The higher your interest rate, the more you will be paying in relation to the principal amount of the loan. Mortgage loans are heavily weighted with higher interest payments early on, so you will want to ask your mortgage lender to see the loan amortization schedule. This will give you a true picture of what you are actually paying from month to month.
As a home buyer, your goal should be to qualify for the lowest possible mortgage rate. The more you have your finances in order before you apply for your home loan, the better off you will be. You should work to pay down your existing high-interest debts (credit cards, student loans, car loans, etc.). You should also aim to increase your credit score and make sure you have a healthy, consistent income. Finally, you should save up for a larger down payment. These steps will all help you qualify for a lower mortgage rate and thus reduce your monthly mortgage payments over the 30-year payoff period of your home loan.
Mortgage Loan Amount
Next, you have to consider how much you are actually borrowing. A 30-year fixed loan for a $600,000 house is naturally going to have a higher monthly mortgage payment compared to a $350,000 property. The loan amount may also affect your mortgage rate, depending on the size of your down payment. For example, let’s say the borrower buying the $600,000 house is applying $250,000 of home equity from the sale of their previous home. They are borrowing $350,000.
However, they are applying for a very substantial down payment and this will help them secure a lower mortgage rate. Compare this to a first-time VA borrower who is financing 100% of their $350,000 home purchase. They are also borrowing $350,000, but their financial position is much weaker and they will likely be paying a higher fixed mortgage rate.
There are other closing costs associated with mortgage loans, including attorney fees, home appraisals, loan origination fees and others. You may be able to roll some of these closing costs into your total loan amount rather than paying upfront with your down payment. Just remember this is adding more principal to your mortgage loan and will increase your monthly mortgage payments.
You may also end up setting up specific escrow accounts to cover requisite homeownership costs within your mortgage loan payments. Borrowers may opt to include homeowners’ insurance premiums, HOA dues and property taxes. This will also increase your monthly mortgage payments. However, it may be easier for you to keep up with this kind of arrangement rather than one lump-sum property tax payment each year.
Mortgage Insurance (PMI)
Lastly, you may be paying private mortgage insurance (PMI or MIP) if you did not put down at least 20% of the purchase price. Mortgage lenders will require mortgage insurance premiums to protect themselves from a default borrower. This insurance also helps protect you as a borrower. It will be required until you have paid off a predetermined amount of your loan, which is usually around the 20% threshold. PMI rates may vary depending on the type of mortgage loan, the amount of the original loan and other borrower qualification standards.
These are all the factors you need to consider when understanding how much you can expect to pay for your mortgage loan each month. You should talk with your mortgage lender and request a full breakdown of projected costs. This will give you a better picture of how much home you can truly afford. Just because you are pre-approved for a higher loan amount doesn’t mean you should borrow that much. Understand the other expenses and calculate your monthly mortgage payments to make sure you can afford the home loan.
For help with your mortgage loan needs in Atlanta, contact Moreira Team today. We can help you explore all your home loan options, get pre-approved for your mortgage loan, lock in the best possible mortgage rate and calculate your estimated monthly mortgage payments.