Mortgage

A mortgage is a type of loan that is provided by a lender. It allows you to borrow money so you can meet your financial needs when purchasing or refinancing a home or any other type of real estate property. A mortgage is based on the agreement that the borrower will repay the money along with the interest owed, in the form of a series of payments made at regular intervals, over time. As it’s a loan, the property serves as collateral to secure the amount owed in case the money is not paid back on time. As a result, lenders have the right to seize the property in the event that the borrower fails to make repayments.

The total cost of a mortgage is driven by several factors including the type of loan, the length or mortgage term, applicable interest rate, and mortgage closing costs. The mortgage closing costs include all expenses incurred by borrowers as part of a mortgage transaction. These include origination charges, appraisal fees, title insurance fees, credit report charges, and others.

Down Payment

It’s important to understand “down payment” - another important term - to use the mortgage calculator for New Orleans. Down payment is the amount to be paid upfront towards the home. So in essence it is the first payment that is typically a certain percentage of the home price. The rest of the amount you can borrow through a mortgage.

The typical rule of thumb is to pay 20 percent of the home's price as your down payment, although some mortgage loans require as little as 3.5 percent down. Your down payment reduces the total amount of your mortgage loan, so the more money you put down, the lower your payments will be - or the more expensive a house you can buy. A large down payment also increases the probability of getting a loan approval.

Loan Term

The loan or mortgage term is the number of years you’ll be making payments on your mortgage. At the end of the term, the loan fully matures and you fully own the house.

Your loan program can affect your interest rate and monthly payments. Choose from 30-year fixed, 15-year fixed, and more in the calculator. On a mortgage with a 30-year term the borrowers would have to make monthly payments for 15 years after which it’ll be considered fully paid. Some lenders even offer mortgages with shorter terms of say 8 years.

Loan Type

There are several types of mortgage loans, but the most commonly used are fixed-rate and adjustable-rate loans. Fixed-rate loans have the same interest rate for the entire duration of the loan. That means your monthly payment will be the same, even for long-term loans, such as 30-year fixed-rate mortgages. Two benefits to this loan type are stability, and being able to calculate your total interest up front. Adjustable-rate mortgages (ARMs) have interest rates that can change over time. Typically they start out at a lower interest rate than a fixed-rate loan, and hold that rate for a set number of years, before changing interest rates from year to year. For example, if you have a 5/1 ARM, you will have the same interest rate for the first 5 years, and then your interest rate will change from year to year. The main benefit of an adjustable-rate loan is starting off with a lower interest rate.

Interest Rate

This field is pre-filled with the current average mortgage rate in the mortgage calculator for New Orleans. Your actual rate will vary based on factors like credit score and down payment. In essence interest rate is the percentage rate at which your payments will be calculated. A $250,000 mortgage at an interest rate of 4 percent would amount to $10,000 of payments per year or $834 per month until loan maturity. This is excluding any other mortgage costs like closing or others.

Property Tax Rate

The mortgage payment calculator includes estimated property taxes based on the home's value. You can edit this in the advanced options. Property tax is calculated according to the value of the property and is a tax levied by the local jurisdiction. In some cases the homeowner pays the property tax directly to the local authority and in others, it may be collected with the monthly mortgage and then paid to the jurisdiction one or more times of the year. To pay the property tax with your loan, a loan with an escrow account is required.

Home Insurance

Home insurance or homeowners insurance is typically required by lenders, depending on the loan program. You can edit this number in the mortgage calculator advanced options.

HOA Fees

A homeowners association fee (HOA fee) is an amount of money that must be paid monthly by owners of certain types of residential properties, and HOAs collect these fees to assist with maintaining and improving properties in the association.