How do I calculate my mortgage payment?
Using a mortgage calculator like this one is the quickest and easiest way to calculate your mortgage payment. But if you're financially curious, the formula looks like this:
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The mortgage payment you get from this formula just tells you the combined principal and interest payment, not what the entire payment will be. Most mortgage payments today include additional fees, including payments that contribute to your escrow account, which is later used to pay for larger items like insurance or taxes.
A full modern mortgage payment is made up of the principal and interest, plus other things like:
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 Washington
Washington's real estate can be very expensive, but the good news is that its property tax rates are pretty average. It ranks 23rd in the nation for property taxes as a percentage of value, at 0.92%. That means that if your home's assessed fair market value is $287,200, your taxes will be $2,631 per year.
The state has seen an average amount of warming due to climate change, compared to the rest of the country. That's not good, though, as it still has serious consequences. Glaciers are retreating and the snowpack is melting earlier than it should, meaning less water available for streams in summer, when it's needed most. Sea levels are also rising, putting coastal properties in Washington at risk of flooding and worse. And, lastly, droughts caused by the earlier melts are contributing to an increase in wildfires, which can threaten homes and make air unsafe to breathe.
While a basic homeowners insurance policy may be enough coverage for many parts of the state, you could also benefit from optional flood or wildfire coverage in other areas. Ask your insurance agent what's appropriate, even if it's not required by your lender. You can also plug that number into the Washington mortgage calculator to help give you a better estimate of your overall payment.
Tips for first-time home buyers in Washington
There are several down payment and closing cost assistance programs available for first-time home buyers. They're available through the Washington State Housing Finance Commission. Each is subject to income qualifications and requires you attend a home buyer education course before funds will be disbursed.
Home Advantage DPA
The Home Advantage DPA is the main program used in Washington, which allows for up to an additional 5% of your loan amount to be used as your down payment or closing costs. This is in the form of a second mortgage with no payments due unless you refinance, sell, or pay off your primary loan.
Home Advantage DPA Needs Based Program
The Home Advantage DPA Needs Based Downpayment Assistance is a slightly different program from the straight Home Advantage DPA program. With this loan, you can get up to $10,000 as a second mortgage, financed for 30 years at 1%. The income cap for this program is very tight, however, with residents of King and Snohomish counties not to exceed $147,400 in yearly income, and other residents of Washington to not exceed $115,900 in yearly income.
Opportunity DPA
The Opportunity DPA program offers borrowers up to $15,000 in down payment and closing cost assistance at a 1% interest rate for 30 years as a second mortgage. Income caps apply, with households in the most expensive counties not to exceed $110,950 in yearly income. The program issues this second mortgage based on need.
Advice for all first-time borrowers
Whether or not you qualify for down payment assistance in Washington, you can still apply for other loans with appealing terms for first timers, like FHA loans or conventional loans. Both have low down payment requirements, making them easier to secure, and can be used on a vast array of homes.
Regardless of what program you use, every first-time home buyer should make themselves look like the best mortgage candidate possible. This includes:
- Maintaining steady employment for at least two years.
- Keeping your down payment funds in a separate account to allow them to season.
- Paying down as much debt as possible to lower your debt-to-income ratio.
- Making payments on time to improve your credit score.
It's also important to remember not to do anything drastic with your credit or change your employment between your pre-approval and closing. Your underwriter will review your file multiple times during the process, and will check again to be sure you still qualify just prior to closing. If you've taken out a new credit card, charged up existing credit lines, changed jobs, or neglected your payments, you could risk having your loan approval revoked.
