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How to Calculate Monthly Mortgage Interest, Insurance & Taxes

by Brad Hostetter
  • Overview

    It is important to be able to figure out the amount of money you spend on mortgage interest, mortgage insurance and property taxes. Some or all of these items are often tax-deductible, so it is to your advantage to know the precise amount you allocate to each of them. Knowing the figures will also make you more in control of your budget. Keep in mind that the following interest information only applies to mortgages with a fixed-interest rate.
 
  • Step 1

    Determine your interest rate. It should be listed on just about any major paperwork related to your mortgage.
  • Step 2

    Calculate the interest you pay using an amortization calculator like the one in the Resources section. Notice how the amount of your monthly mortgage payment that applies to the principal will rise over time.
  • Step 3

    Determine if you owe any mortgage insurance premiums. You will if you put less than 20 percent down on your property. The insurance premiums cover your lender in case you default on the loan, and you will typically add the premium in with your monthly mortgage payment or pay it all at closing.
  • Step 4

    Find your local property tax rate. It is sometimes listed when a house is for sale. If not, you can find it in the documentation that accompanies the sale of your house or you can ask a tax official for your locale.
  • Step 5

    Calculate the tax you owe. You may be required to pay a lump sum at closing, add it every month to your mortgage payment or pay once annually. People often list the tax rate per $1,000, so simply multiply that however many times you need to in order to match the value of your house. For example, if the tax rate is $15 per $1,000 and you have a $200,000 property, multiply $15 X 200 for a total of $3,000 in taxes.
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  • Mortgage interest rate Mortgage insurance premium Local property tax rate
  • Mortgage interest rate
  • Mortgage insurance premium
  • Local property tax rate
  • Reduce the interest you pay by either paying off points on your mortgage at closing or later on during the life of your mortgage. Cut down on the amount of interest you pay over the course of your mortgage by adding extra money to your monthly payments. All of this extra money will apply to the principal and will reduce the interest you pay later.
  • Reduce the interest you pay by either paying off points on your mortgage at closing or later on during the life of your mortgage.
  • Cut down on the amount of interest you pay over the course of your mortgage by adding extra money to your monthly payments. All of this extra money will apply to the principal and will reduce the interest you pay later.

References & Resources