![]() ![]() They always greatly underestimate the cost, and I have no idea why. Zillow’s Mortgage Calculator Might Underestimate Some CostsĪll in all, I felt that Zillow’s calculator was the most thorough in that it included all the costs you might incur as a homeowner, though it did leave plenty of room for error if used incorrectly.Īdditionally, I should point out that the estimated mortgage payments you’ll find toward the top of individual listing pages on Zillow (click on the star icon directly below the images) seem to be off when it comes to taxes and insurance, and as such, what you would expect to pay each month as a homeowner. So if you’re going with the FHA, use a calculator designed for FHA loans. ![]() It also ignores the possibility of PMI and HOA dues, both of which could be costly expenditures to ignore.īy the way, none of these calculators are geared toward FHA loans, which come with both upfront and monthly mortgage insurance premiums that will completely change the picture. This is fine if you don’t have impounds and pay insurance and property taxes on your own, but otherwise it greatly diminishes what you’ll actually have to pay each month, as illustrated above. The third result, which was a loan calculator from Bankrate, simply provided the principal and interest payment. So yes, it’s very important to consider and calculate all potential costs, and to utilize a calculator that gives you the option to include them all. Once all costs are factored in the monthly payment is nearly 50% higher. The second image to the right shows the same monthly payment with taxes, insurance, PMI, and HOA dues included. In the screenshots posted above, the first image is from Zillow’s calculator with only principal and interest accounted for. Also, you might not have to pay PMI, even if putting down less than 20%, so it doesn’t always apply. Still, actual numbers can and will vary, so these are just estimates once again. If you put anything lower, it calculated it at around a half a percent, but also adjusted it based on loan amount and down payment. If you entered in a 20% or higher down payment, it simply ignored PMI. However, their calculator was much more intuitive with regard to PMI. So again, the numbers can get thrown off pretty quickly here as well. Their homeowners insurance estimate seemed fairly accurate for me, in California, but I know other states, like Texas, have much higher rates. While it seems like no big deal, it could easily make or break a borrower. One slight difference was that they calculated property taxes at a rather low 0.75%, as opposed to 1.25%. To me this one was already superior because it included the full PITI mortgage payment. Next up in the search results was Zillow’s mortgage calculator, which included property taxes and homeowners insurance by default. Make sure the calculator you use provides the complete picture to avoid any surprises.While the image on the right is the full housing payment including insurance, taxes, HOA dues, etc.The image on the left is simply the principal and interest payment (mortgage only).Look at the difference in monthly payments once everything is included.Zillow’s Mortgage Calculator Includes Everything It might give you a decent ballpark, depending on your loan and LTV, but people shouldn’t use calculators to get rough estimates. Homeowners insurance is also ignored here, which is mandatory for all mortgagors, so the chances of this calculator being accurate are slim to none. My guess is most users probably won’t see that, or take the time to add the two numbers up to see what their true monthly payment might be with PMI included. It simply displays the monthly cost of the PMI in the details below the total payment. Strangely, when I changed the PMI value, the monthly payment output from the calculator was the same because this calculator doesn’t actually add it to your payment. The PMI thing is a problem because borrowers may not actually have to pay it, so including it by default can throw the numbers off in a hurry. Many people don’t know the first thing about mortgages, and most certainly don’t know what PMI is. My issue with this calculator is that it assumes the user knows a thing or two about mortgages, which just isn’t the reality. It also assumed a 1.25% property tax rate and 0.5% for PMI. The first result, which was from a generic mortgage calculator website, asked for a home value, a loan amount, an interest rate, loan term, and start date. These items can potentially double the monthly housing payment in some cases.Such as homeowners insurance, property taxes, and mortgage insurance.In fact, many don’t include very important components of the overall payment.Not all mortgage calculators are created equal.Mortgage Calculator Results Definitely May Vary ![]()
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