Texas Mortgage Calculator

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Texas Real Estate Market

The coronavirus pandemic has taken its toll on the Texas real estate market. According to a recent report from the Texas A&M Real Estate Center, home sales in Texas fell 2.1% from April 2020 to May 2020.

Fewer and fewer people in Texas are putting their homes on the market right now. The housing stock (a measure of the number of available homes) fell to just 3.2 months of inventory in May and 2.8 in June – the two record levels for Texas, according to the report. This means that your choices might not be as numerous as they normally are. It also means that buyers may face increased competition and higher prices.

How do I calculate my mortgage payment?

Your mortgage payment is the sum of four components, collectively called PITI: principal, interest, taxes, and insurance. If you live within the boundaries of a Homeowners Association (HOA), you may also need to pay HOA fees.

The formula for calculating your monthly mortgage payments by hand is complex. We recommend that you use a Texas mortgage calculator (like the one on this page) to get accurate results. However, if you want to try to calculate it yourself, here is the formula:

The median home price in Texas in August 2020 was $ 211,199, just below the median home price of $ 248,857 for the United States as a whole. If you put 20% on a home like this with an interest rate of 3.23% and owe no HOA fees, you can expect a monthly mortgage payment of $ 1,196, according to our mortgage calculator. from Texas.

Let’s take a closer look at each of these factors to see how they might affect your mortgage payment on a Texas home.

Main

Principal is the amount you borrowed to pay off your house. It usually pays for itself over 15 or 30 years. Principal will be a larger portion of your monthly payment over time.

If you can afford a larger down payment, you won’t need to borrow that much for your home. This means that you will have less principal to pay back over the years. Lower principal also means lower monthly mortgage payment.

To see the effects of various down payments on your monthly mortgage costs, try different numbers in our mortgage calculator above for Texas.

Interest

Interest is the bank’s payment to lend you money. The amount of interest you pay is based on your remaining loan balance and your interest rate. You can use the Texas Mortgage Calculator above to see the cost difference between different mortgage interest rates. Check out our guide to current Texas mortgage rates if you’re not sure what interest rate to expect.

In the first few years after buying your home, your remaining balance will be quite large, as will your interest payments. Over time, as you pay off the balance, your interest payments will decrease and you will begin to move more quickly towards paying off the loan.

Taxes

One of the main ways that local governments make money is by charging homeowners taxes on their property. The amount you pay for taxes each month will vary depending on where you live and the value of your home. Texas homeowners have some of the highest property taxes in the country. In our Texas mortgage calculator, you can factor in property tax costs using the “Additional Entries” option.

In Houston, for example, the average property tax rate in 2019 was 1.713%. That makes it number 14, according to the Lincoln Institute of Land Policy. The median price of homes in the area is $ 179,100. Together that translates to an annual tax bill of $ 3,068, or $ 256 more on your monthly mortgage payment.

Your lender will normally take this money, put it in an escrow account, and then pay your property taxes for you each year. Once you’ve paid off the mortgage, you’ll need to remember to do it yourself.

Assurance

If you have a mortgage, your lender will also ask you to purchase home insurance. This is usually also included in your monthly mortgage payment. In Texas, the average annual premium for home insurance in 2017 was $ 1,893, according to the Insurance Information Institute. Divided into a monthly amount, this would add up to an additional $ 158 per month. This has a moderate impact on your monthly payment. You can see how insurance costs will affect your mortgage payments with our Texas Mortgage Payment Calculator.

If you haven’t made a very large down payment, your lender may also ask you to pay for private mortgage insurance (PMI). This protects your lender in the event of default on the loan. Typically, conventional mortgage lenders require you to deposit at least 20% to avoid PMI.

What to Know Before Buying a Home in Texas

If you are looking for a mortgage calculator for Texas, you will also need to know other information on home loans. Here are a few things to keep in mind:

Check your credit score

One of the main factors that affect the amount you pay for your mortgage is your credit rating. The credit score required for a home loan varies depending on the lender, but in general, a higher credit score is better. This is because your credit score directly affects your interest rate. Even small changes in your interest rate can add up and cost you thousands, if not tens of thousands, of dollars more over the life of your loan. You can see the cost differences between low and high interest rates using our Texas mortgage calculator above.

If you are preparing to get a home loan, one of the first things you need to do is check your credit score. And unless you have a perfect score, it’s worth taking the time to improve your credit score before applying for a Texas mortgage.

Save as much down payment as possible

Most financial experts recommend putting at least 20% down on a house. There are several reasons for this:

  • It reduces the amount of mortgage you have to take out
  • It gives you more equity in the house from the start
  • It avoids an additional monthly PMI payment

First-time home buyers can struggle to find a 20% down payment. After all, a Texas down payment would be around $ 42,240 based on the median price of a home in Texas. You’ll also need to budget for closing costs, moving-in costs, and other expensive expenses.

Some mortgage programs allow you to buy a home with a low down payment or even no down payment. Some examples include FHA loans and USDA loans. If you decide to consider one of these programs, you will usually have to pay a PMI or similar mortgage insurance payment.

This is where using a home loan calculator designed for Texas can come in handy. Use the Texas Mortgage Calculator above to compare the different monthly payments associated with various down payments and PMI costs. When you know how your loan terms translate into monthly mortgage payments, you can more easily decide which mortgage program is right for you.

Tips for first time home buyers in Texas

Here are three things first-time home buyers often overlook:

Look for first-time home ownership programs

Buying a home is never cheap. Fortunately, there are many programs that offer assistance specifically to first-time home buyers. If you are eligible, these can provide you with a financial boost to start your new season on the right foot. A good place to start is the Texas State Affordable Housing Corporation. There are many other programs available at various state, local, and federal levels.

Don’t forget to budget for closing costs

Buying a home is expensive, even before taking out the mortgage itself. There are forms and deeds to put away, inspections to pay, reports to check, real estate agent fees, etc.

As the buyer, you usually have to pay the bulk of these costs. They can range from 2% to 7% of the purchase price. You may be able to shift some of these costs into the mortgage, but others – like home inspections – you’ll have to pay out of pocket.

Remember to budget for home repairs

Remember to set aside some money for regular home maintenance. There are a few rules of thumb for budgeting, but most experts advise saving 1% of your home’s value per year. In Texas, the median home value is $ 211,199 according to Zillow. This means that you will need to set aside an additional $ 176 per month to cover maintenance and upkeep.


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