Escrow payment: taxes, insurance, and PMI
Besides the principal and interest due on a mortgage, there will likely be other costs your lender may want you to pay. The additional charges will almost certainly include property taxes and property insurance. And if the LTV (loan-to-value) is greater than 80%, you might also have to pay private mortgage insurance (PMI). Borrowers frequently pay these costs collectively as an escrow payment.
This mortgage calculator considers all these costs (and more!) and will optionally include them in a mortgage payment schedule.
- Enter the Price of Real Estate
- Enter the Down Payment Percent or Down Payment Amount
- Set Mortgage Loan Amount to 0 (if it's unknown)
- Enter the expected Number of Payments
- Enter the anticipated Annual Interest Rate
- Set Mortgage Payment (P & I only) to 0 (if it's unknown)
- Enter the Annual Property Taxes
- Enter the Annual Insurance
- Enter the Private Mortgage Ins. (PMI) rate
- Click either Pmt & Cost Schedules for the answers.
That's it! The other options you can leave as they are or set them as desired.
But there's a lot more you can learn from this mortgage calculator.
IMPORTANT - Always enter (and reenter) a 0 if you want a value calculated.
Why doesn't the calculator automatically recalculate the last unknown?
We want the calculator to create an amortization schedule using whatever parameters you want to use. Such behavior is a feature!
By not automatically recalculating the payment (for example) when the mortgage amount changes, this calculator lets those users create a payment schedule with whatever payment amount they want.
PMI or private mortgage insurance
If you do not have a down payment that equals at least 20% of the home's purchase price, then the mortgage issuer will likely require you to pay mortgage insurance. PMI protects the lender in the event of a default. The lender gets paid when the borrower can't pay.
Though the lender is the party that collects on the insurance, should there be a default, the borrower pays the insurance premium. The insurance amount the borrower pays depends on the size of the mortgage and the down payment provided. The larger the mortgage and the less money put down, the higher the PMI rate. PMI rates range from 0.5% to 1.5%.
The annual PMI premium equals the PMI rate from the tables times the loan amount. However, the PMI premium is collected monthly, so the calculator divides the calculated premium by 12 (or the number of payments per year) to arrive at the monthly premium due.
You can look up PMI rates in each provider's rate tables. But note, the rate tables won't ask you about the down payment amount. The tables use a value known as your LTV number. LTV or loan-to-value is the ratio of the mortgage loan amount to the price of the property.
If the house sells for $400,000 and you put down $40,000, leaving a loan balance of 360,000, your LTV is 90% (360,000/400,000). This calculator calculates the LTV for you.
While PMI certainly adds to the borrower's cost, the good news is, you do not have to pay PMI premiums for the entire mortgage term. Once you've built up equity and your LTV drops below 80%, PMI premiums stop. See SFGate's guide for additional details.
The payment schedule created by this calculator will show you when the PMI premiums stop.
These settings impact your escrow payment
Found on the "Options" tab:
- Annual Property Taxes - are included in the escrow column on the schedule. Please be sure to enter a yearly amount in the calculator. optional
- Annual Insurance - the escrow column on the mortgage schedule also includes property-casualty insurance. optional
Hopefully, you'll find this to be a full-featured mortgage calculator. If something is not clear, you may leave your question in the comments below