Which mortgage estimate is right?

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My wife and I are looking into buying a house. Online mortgage calculators give us an estimate of about $ 700-800 (diff. interest rates) taxes added no PMI needed. Someone told us they have called a bank and got a quote of $ 980. Huge difference. 105K loan at around 5%, 30 yr fixed. Why the big difference and which is right?

5 Comments
  1. Reply
    knowitall
    February 3, 2011 at 6:39 pm

    Taxes can make the difference. Often “someone” gets things wrong, too. I don’t understand why so many people ask “someone” since they are often incorrect.

  2. Reply
    Angie
    February 3, 2011 at 6:49 pm

    There are different schools of thought regarding what percent of your income you should be devoting to your mortgage. Some will say no more than 30%, others as much as 50% or even higher. Remember when shopping for a house, pick one that you feel you can comfortably afford, not one that some mortgage broker or real estate agent wants you to afford. They priorities and your priorities can be different. They want you to sign up for things on the more expensive end, as they profit more.

  3. Reply
    Ryan
    February 3, 2011 at 7:11 pm

    A $ 105K, 30-year mortgage at 5%, is just $ 564/month (principal & interest only). You then need to know what the annual property taxes are and insurance cost and divide that by twelve and add that to the monthly payment amount to get an accurate monthly payment amount. If you are borrowing more than 80% of the value on the first mortgage, you will also be required to pay PMI (Private Mortgage Insurance)…a rip off, so avoid if you can.

    Good luck! -Ryan

  4. Reply
    Cheryl G
    February 3, 2011 at 8:05 pm

    The lower quotes only include the principle and interest. You’ll also need to pay pro-rated taxes and home owner’s insurance (PITI). These amounts vary greatly depending upon your area and how high the taxes will be on the house you purchase, as well as how much insurance will be required.

    Don’t rely upon hearsay to make a decision. Select a lender and get a direct quote. Ask for a letter of pre-qualification stating how much money you can borrow based upon your income and current debt ratio.

    Then go to a Realtor and start shopping.

  5. Reply
    Gordon
    February 3, 2011 at 8:43 pm

    Not knowing your taxes how could anyone tell.

    Principal & Interest on $ 105,000.00 at 5% over 30 years would be $ 563.66 add your taxes and insurance and you have your mortgage payment.

    I suggest you get a good faith estimate which your loan officer will give you at application. You will need to give them an estimate for the property taxes and insurance and they will estimate your payment based upon a interest rate they can lock in on that day and they will estimate your closing costs.

    Why go on what “Someone says” when you can get the information from the loan officer themselves.

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