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My Mortgage Choice

My Mortgage Choice

I’ve always thought the state of Oregon would be a beautiful place to live, so I picked out a starter home in Portland, OR. The single family home has 3 bedrooms, 1 baths and is 2,296 square feet with a driveway, garage, and large lot. It was built in 1950. The house is priced at $139,900. Previous annual property taxes were $2102.16, or $175.18 per month. Homeowners insurance for the property is estimated at $480.00 annually, or $40 per month.

Upon my graduation from college I would have to relocate to Portland, OR. This would mean finding new employment. A quick search of the area tells me that I should be able to find employment in my field with a lowest-range salary at $52,000 per year, or $4,333.33 gross monthly. Good budgeting means that my house payment should not be more than 25% of my monthly income, or $1083.25 total. I have good credit and found an interest rate of 4.5%, so I will go with a fixed rate loan to keep the rates the same. I’ll plan to pay a 10% down payment of $13,990.00. With a 30 year loan, my total monthly payment would be $853.18, well below my limit. A 15 year loan would bring my total monthly payment up to $1012.18, still under my budget. The 15 year fixed loan is most appealing to me, as it would allow me to build up my equity quickly and I can afford the terms. The below chart shows the loan breakdown for a 10, 15, 20, and 30 year fixed rate loan. Flood insurance and points are not needed.

Term Years

Monthly Mortgage

Monthly Insurance
+ Property Taxes

Total Payment

10

1305.00

215.18

1520.18

15

963.00

215.18

1178.18

20

797.00

215.18

1012.18

30

638.00

215.18

853.18