Charlotte NC Real Estate Agent

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Mortgage & Price Range Worksheet

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What a Mortgage Payment Consists of:

1. Principal: The repayment of the original amount borrowed on a monthly basis.

2. Interest: The cost of borrowing the principal amount, repaid on a monthly basis.

3. Taxes: Real Estate taxes paid to a local government agency.

4. Insurance: Homeowners insurance on the home. Also any mortgage insurance, which is paid to protect the mortgage company.

The total of these items is known as the PITI payment (principal/interest/taxes/insurance).

Types of Mortgages

Fixed: A fixed term (for example, 15 or 30 years) as well as a fixed interest rate. The interest rate and term are fixed at the start of the mortgage. The monthly amount for the payment of principal and interest will not change during the term of the mortgage.

Adjustable: Often referred to as an ARM (Adjustable Rate Mortgage). The interest rate on your mortgage will be adjusted up or down according to current interest rate levels. The monthly amount for your principal and interest payment will go up or down with these rate changes.

See Advantages and Disadvantages of Fixed and ARM

Comparing Terms

Always make a comparison between a 15 year term payment and a 30 year term payment. The difference is often surprisingly smaller than anticipated. The savings over the term of the loan, however, can be substantial.

For example, comparing a 15 year term to a 30 year term, $100,000 mortgage at an 8 1/2% fixed rate yields the following results.

EXAMPLE: Comparing a 15 year term to a 30 year term.	15 Year	30 Year
Principal and Interest Payment (per month)	$985	$769
Total paid over term in Principal & Interest	$177,300	$276,840
Total interest over term	$77,300	$176,840

Monthly Payment Calculator

Mortgage & Price Range Worksheet

Interest Rate Chart

ADVANTAGES AND DISADVANTAGES OF FIXED and ARM MORTGAGES
Advantages--Fixed	Advantages--ARM
Since you know what your payment will be for the life of the loan, you can budget more easily.	Lower initial interest rate and therefore lower monthly payment.
No possibility of an interest rate change making your mortgage payment suddenly unaffordable.	If interest rate declines, your payment will also decline.
No anxiety over interest rate fluctuations.	Easier to qualify for due to lower interest rate and payment amount.
Disadvantages--Fixed	Disadvantages--ARM
More income needed to qualify because of higher initial mortgage rate.	If interest rate increases, your payment will also increase.
If interest rates decrease appreciably, it will be necessary to refinance to get a lower payment.	A large increase in interest rates--and payment--could make your house unaffordable.