Closing Cost Calculator

Formula

To calculate the monthly mortgage payment:

\[ \text{Monthly Payment} = \frac{\text{Loan Amount} \times \text{Monthly Interest Rate}}{1 - (1 + \text{Monthly Interest Rate})^{-\text{Number of Payments}}} \]

Where:

$\text{Loan Amount}$ is the total loan amount after the down payment
$\text{Monthly Interest Rate}$ is the annual interest rate divided by 12
$\text{Number of Payments}$ is the loan term in years multiplied by 12

What are Closing Costs?

Closing costs are the fees and expenses you pay when you close on a home, beyond the down payment. They typically include loan origination fees, appraisal fees, title insurance, and more.

Example Calculation

Let's assume the following values:

Purchase Price = $300,000
Down Payment = 20%
Loan Term = 30 years
Interest Rate = 4%
Property Tax Rate = 1.2%
Home Insurance = $1,200/year
HOA Fees = $50/month

Using the formula:

\[ \text{Loan Amount} = 300,000 \times (1 - 0.20) = 240,000 \]

\[ \text{Monthly Interest Rate} = \frac{4}{100 \times 12} = 0.00333 \]

\[ \text{Number of Payments} = 30 \times 12 = 360 \]

\[ \text{Monthly Payment} = \frac{240,000 \times 0.00333}{1 - (1 + 0.00333)^{-360}} \approx 1,145.80 \]

\[ \text{Monthly Property Tax} = \frac{300,000 \times 0.012}{12} = 300 \]

\[ \text{Monthly Home Insurance} = \frac{1,200}{12} = 100 \]

\[ \text{Total Monthly Payment} = 1,145.80 + 300 + 100 + 50 = 1,595.80 \]

The total monthly payment is approximately $1,595.80.