CALCULATING A MORTGAGE PAYMENT

Using the Mortgage Calculator

Our Mortgage Calculator is a great tool for getting a ball-park of what your loan payment will be, but only for the principal loan amount and interest. For an accurate house payment estimate, if you have the interest rate that your loan program has, it’ll be spot-on.

After determining the principal and interest payment, you’ll need to add taxes and insurance, and possibly mortgage insurance, for the full payment amount. You probably need more information for taxes and insurance, however. Read below for how we estimate taxes and insurance for our clients.

About Your Payment

P is for Principal

PrincipalPrincipal refers to the Loan Amount. Sales price minus down-payment. **Add the VA Funding fee if applicable.

I is for Interest Rate

InterestWhen the Feds say what the current interest rate is, that’s not necessarily what a home loan interest rate is. Interest rates vary according to your loan type, loan amount, credit, job history, down payment, and who the lender is. Get a quote from your home loan lender or use a ball-park number knowing that it will change.

T Is For Property Tax

Property Tax- To calculate property tax in Southern Nevada, the Rule of Thumb that we use it to guesstimate “Under 1% of the purchase price of your home” if we don’t have the exact address. You can do an exact address search on the Clark County website’s Assessors Page.

Instead of re-assessing each property every 4 years like the Clark County Tax Assessors office used to do, Voters chose to cap tax increases to 3% per year for owner-occupied homes and 6% for an investment property. Property Tax does not change when a property transfers to the new home-owner. The good news is that this law became effective in the mid-2000’s when prices and value were considerably lower than they are now.

County Tax Rates

Clark County has 111 different tax district line items. Las Vegas, Henderson, N. Las Vegas, Boulder City, Mt. Charleston and Pahrump all have different tax rates and many line items are applicable for one property. Tax rates for each district‘s tax are based on how much money is budgeted for government-provided services, such as schools, police, fire, parks, libraries, and capital projects, such as flood control and transportation. The LV, NLV, and Henderson full rate chart is available on the Clark County Treasurer‘s website. If you know the address of a property, you can learn the exact tax on their website.

The Second I is for Insurance

Home Loans have two types of insurance- Homeowner’s Insurance, and when you put less than 20% down on a property there’s Mortgage Insurance.

Homeowner’s Insurance– covers the building, contents, and liability, so every lender requires you to have it to protect their investment. If there is under an 80% loan to value ratio, mortgage insurance will also be required by a lender. In the Las Vegas Valley, the Homeowner’s Insurance cost will usually be under $1000 a year so divide your guess by 12. Factors for the Cost of Homeowner’s Insurance include:

  • value of structure
  • square footage
  • lot size
  • area of town
  • age of home
  • swimming pool and/or spa
  • security system
  • type of fireplace
  • your credit score
  • your past insurance claims
  • the limits you choose for the policy
  • additional coverage
  • owner-occupied
  • investment property
  • multiple-policy discount

Mortgage Insurance

The second type of insurance is Mortgage Insurance. For a conventional loan, once a 20% loan to value ratio is achieved, you can ask the lender how to make it go away. For FHA loans the mortgage insurance cannot be removed. Commercial Loans call this insurance PMI (Private Mortgage Insurance) and FHA calls it MMI (Monthly Mortgage Insurance). This insurance completely benefits the lender. Since the bank failures happened around 2010, these rates have gone up considerably.
You’ll need to get a more accurate figure from your lender to calculate this exactly because everyone’s situation is different. I will suggest that if you budget $100-$150 a month in your calculations you should be close. Rates are determined by home loan history, credit score, sales price, down-payment, and value of the property.
In conclusion, use the mortgage calculator for general information. Always get an estimate from a good lender before looking for homes. The most important factor with a house payment is your comfort level amount, not what you qualify for.
See our Blogs about Credit Score FICO Basics or 7 Ways To Improve Your Credit Score Plan because the higher your credit score is, the lower your payment will be.

** VA Funding Fee Chart Effective Date: January 1, 2020

VA Funding Fee 2020

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by Kurt Grosse

 

Top Producing Realtor, Ret. Nevada Engineer (P.E., C.E.)

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