How do I calculate my mortgage payment?
Tabulating your mortgage payment by hand can be gruesome, which is why most people opt to use a mortgage calculator like this one. But, if you're financially curious, this is the basic formula to start with:
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This formula is just a starting point, as it only gives you the principal and interest payment portion of your mortgage. For a few lucky people, that's all there is, but most mortgages also include expenses like mortgage insurance and the components of your escrow account.
An escrow account is a special holding account for partial payments toward big expenses related to your home that are often paid once yearly. Rather than risk you forgetting to pay it, or being unable to pay these fees, your bank just collects 1/12 of your payment every month and holds on to it for you.
Here are a few common items that are escrowed:
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 Oklahoma
Housing in Oklahoma is very well priced, compared to national averages, and the state has fairly low property taxes, too. It ranks 32nd out of the states for tax as a percentage of property value, at just 0.74% on average. This means that if your home's assessed fair market value is $107,700, you'll only pay $796 yearly in taxes.
Eastern Oklahoma, where most of the real estate for sale is located, has not seen as much warming as many other areas of the country due to climate change, but it is still experiencing a change in how precipitation works. Like in many areas, the wettest days are much wetter, which can result in flooding, and, at the same time, fewer days of rain can also encourage drought -- it's a vicious cycle. Tornadoes have long been an issue in Oklahoma, as have wildfires in some parts of the state.
Depending on where you live in Oklahoma, it's probably going to be smart to get more than just basic homeowners insurance coverage. If you're in an area prone to drought and wildfire, wildfire insurance will be important to keep; most of the state should consider wind insurance due to the estimated 60 tornadoes on average per year. Once you have the cost of these coverages in hand, you can plug that number into the Oklahoma mortgage calculator to help give you a better estimate of your overall payment.
Tips for first-time home buyers in Oklahoma
The Oklahoma Housing Finance Agency offers one program to help first-time home buyers with their down payment and closing costs, to the tune of 3.5% of their total loan amount. Buyers must purchase a home in the state of Oklahoma that will be their primary residence and must income-qualify based on their location and family size, not to exceed $150,000 per year.
If they do qualify, the 3.5% will appear as a silent second mortgage on their property, with a 0% interest rate. This loan must be repaid either when their home is sold, the loan is refinanced, or their first mortgage is paid off, so recipients should have a repayment plan in place before applying.
Advice for all first-time borrowers
Whether you qualify for down payment assistance in Oklahoma to buy your home or not, you can still apply for national mortgages with great terms, like FHA loans or conventional loans. Both have low down payment requirements, making them easier to secure for first-time buyers, and can be used on a vast array of homes.
Many homes in Oklahoma will also qualify for USDA financing, which can provide special terms, based on where the home is located, and veterans have the option of a VA loan to finance their home purchase.
However, before you apply for your mortgage loan, you want to become the best version of yourself possible in terms of your finances. That means that you must maintain steady employment for at least two consecutive years, you must pay creditors on time to help boost your credit score, and you absolutely must put your down payment and closing costs in a dedicated bank account to allow it to season, showing that it will be there when you're ready for it.
Other things that will help improve your odds of approval include paying off anything you can to lower your debt-to-income ratio, and not opening new credit lines between your pre-approval and closing day.
