Question 1

How is a mortgage payment calculated?

Accepted Answer

The monthly payment is calculated using the PMT formula considering the loan amount, interest rate, and term. Property taxes, insurance, and PMI are added on top if applicable.

Question 2

What is PMI (Private Mortgage Insurance)?

Accepted Answer

PMI is insurance that protects the lender when the down payment is less than 20% of the property value. It is typically removed once you reach 20% equity.

Question 3

How much down payment do I need for a mortgage?

Accepted Answer

Ideally 20% to avoid PMI, but programs exist with as little as 3% down. A larger down payment reduces your monthly payment and total interest.

Question 4

Is a 15 or 30-year mortgage better?

Accepted Answer

A 15-year mortgage has higher payments but you pay much less in interest. A 30-year mortgage offers lower payments but the total cost is significantly higher.

Question 5

What factors affect mortgage interest rates?

Accepted Answer

Your credit score, down payment amount, property type, loan term, and market conditions are the main factors that determine your rate.

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