Is Zillow Mortgage Calculator Showing You The Wrong Monthly Payment?
Hey, your monthly payment is one of the most important things when you are shopping for a home because you need to know that you can actually afford to buy the home. Not only do you have an upfront cost below some of the monthly costs of your payment plus utilities and any other maintenance costs you’re gonna have with the home. And I keep seeing this issue that people have when it comes to Zillow is they’re searching for a home. And so that maybe you land across this home and you’re like, Oh, this looks great. I think it’s in our price range. And you look at this estimated monthly payment versus 3203 is what Zillow is suggesting as a monthly payment on this home. And at first glance, most people are like, cool, it’s gonna cost me $3,200 To buy this home, I can absolutely do that. But the problem is, is ZIL isn’t showing you a monthly payment, that is likely going to be your scenario. So what we then have to do is we have to scroll down here. And we’re going to come to the monthly payment monthly costs section here, I cannot tell you the number of times that I’ve talked with a client and they’ve seen this number. And then they go and look at the home, they write an offer. And then they go and talk to a lender to find out the monthly cost is actually going to be quite a bit more than this. And then they already are committed into this home. And a lot of people instead of saying you know what we took on too much, we’re gonna back out of this, they continue to move forward with the deal with a payment they’re uncomfortable with this mentality is what a lot of people would call being house poor, we don’t want that.
Why Zillow Mortgage Calculator Is Not So Accurate
So this is why this number isn’t super accurate. So 3203. First of all, if we drop open this principal and interest, we can see immediately that Zillow is estimating we’re going to put 20% down, most people are not putting 20% down the minimum for first-time homebuyers is 3% on a conventional loan. However, a lot of people use five to 10%. So in this instance, let’s just say 5% will already that jumped our monthly payment up to $3,900 instead of $3,200. So this can brace out a lot of people very quickly, especially with how competitive everything is, people are looking near the higher end of their price ranges. And so if 3200 a month was already the high end of your price range, you absolutely don’t want your payment to come back to being 3900. Okay,
Calculating Zero For Interest Rates With Zillow Mortgage Calculator
Then also for interest rates, Zillow wants to basically show you their mortgage lender options, which is fine, but they’re showing you kind of the lowest rate that is likely on their site, which may not be the most realistic number. And so I have a webpage that you can go to when the house you love.com/rates. And what it will do is put together the national averages for different types of loans. So you can see those if you’d like to Your situation may be different than this. But this might be a more realistic figure to run off of than just kind of an advised rate here. So let’s say we bring this to 3.5. Then for mortgage insurance, we do want to include the mortgage insurance, that’s why the cost jumped up so much from the 20% down. And if you’re in descript do have a video about how PMI can be used as an investment. It’s not just this terrible cost that happens all the time.
We, unfortunately, can’t change this number. But I do have a calculator that can help you here in a second property taxes, I will give credit to Zillow, they usually do a really good job with property taxes, I do have a link to this property tax map that’s going to show you the rates for property taxes in different states may change depending on which county you’re in and your state. But these are going to be good averages for you to run off of. And then homeowners insurance here, usually a fairly decent estimate, again, I do have a map for average rates in the US, this is going to depend a lot on where you’re at.
So if you’re in, for instance, Florida is going to have a lot higher homeowners insurance than we would here in Ohio, because they’re hurricanes there and no hurricanes yet have come to Ohio. So we have that in there. And then usually they’ll do a good job with HOA fees. And of course, they’re not including utilities, they just show you the month’s describe payment. So overall, not terrible. And what they’re doing is not on purpose necessarily to try to, you know, they’re not showing you something that’s not unrealistic, but they’re showing something that’s not typical for most people. And so I have a monthly payment calculator that might help you get a better idea.
This is free. All we do in the beginning is put in our loan details. So we’re gonna do 5% We’re going to do 3.5% is our interest rate for mortgage insurance. We can change these a little bit so conventional with good credit. You mentioned with fair credit, FHA, VA, and USDA We’re gonna go with conventional with good credit, which uses point six 5% of the loan amount as mortgage insurance, which is going to be a really good typical average for you. For homeowners insurance, I’ve found that 60 is a really good estimate here. You might raise this to 80 if you live somewhere like Florida. So, that’s 6% of the price of the house as homeowners insurance, and then the length of the loan term.
And so what you can do is put in 570 to 500, we’ll come up here 570 to 500, we’ll put in the square footage, and so that is 3750. Okay, then monthly Hoa, there was none in there, then we’ll have a look at our annual taxes here. So taxes in Ohio are high at 13,200. utility costs per square foot, this is what the VA uses, as their rough estimate for utilities, this might be a really good one for you. If it’s an older home, you might want to bump this up to somewhere like 14 to 16 cents per square foot. If it’s an energy-efficient home, you might want to drop it down to 10 cents a square foot. And then maintenance savings would be how much are we going to put into savings every month for the maintenance of the home.
So, a lot of people who own their own homes or just moved in don’t think they need something like this. But it’s great to save money every month. So when something needs to be fixed, even if it’s hardware updates, if it’s pain, if it is a furnace that goes out, you want to have that savings set aside. So how much of the purchase price per year are you going to be saving, a lot of people would suggest 1%.
That may be a little high point 5% For me feels comfortable. And so here it would break down your mortgage payment with much more realistic numbers. So you can see we’re pushing 4100 compared to the initial 3200. That was advertised on Zillow. But this is a much more realistic estimate that we can look at, instead of looking at the low rate that was super interesting, and then moving forward with it, and then finding out the monthly payments are much higher. And then what this also does is take in what you put in for utilities and monthly savings, and gives you an estimate potentially of what you might pay. So if you’re looking at this, and you’re saying, Oh, this actually seems high, we can actually drop this down if you’d like to, depending on your area, and what you believe might be more accurate.
So then that shows you what the mortgage payment would be plus potential other costs. And then that would show you your total monthly payment here. And you can do this when shopping with multiple homes. So if I was looking at this home, I would put in 236 Rubicon 236
Rubicon cool. So 236 Rubicon and then you can also put it in other homes as well, to help you get a better idea of what this monthly payment is going to be. Please do not be the person that just sees, oh $3,200 a month sounds great. That is not tailored to your scenario. And your situation and your payment will be different, most likely than what is shown on Zillow. And I don’t want you to get emotionally invested in a home and get excited and write a contract on it.
If that’s not going to be what the payment actually is. One of the best ways to get the monthly payment is using a calculator like the one in the description, and also talking to a loan officer who can give you a full quote and a breakdown. So if you’re interested in talking with a helpful loan officer who can walk you through the process who operates the same way that I do and can give you a breakdown of what your rates going to be your monthly payments going to be an estimate all of those other costs with you to help you get a better understanding of your budget and the upfront cost of the home.