I am not an accountant. Take all words I say with a grain of salt. That said, you should use at least 3 versions of the same calculator to test the financial waters you are thinking of entering. That means I should provide you with 9 different calculators, because there are 3 questions you need to ask yourself as a buyer.
There are 3 main calculators that home buyers typically use when they seek financial help:
- Affordability Calculator - How much house can I afford?
- Rent Vs. Buy Calculator: Should I even consider buying?
- Actual Mortgage Calculator: What's the likely monthly payment?
Many of the calculators a buyer uses will have fields such as:
- Assessed value of the home.
- Property Taxes
- Homeowners Insurance
- Closing Costs
You haven't bought the home yet, so how could you possibly know what to enter into these fields?? That's one way these calculators are different: They each explain the fields vaguely and differently, adding to the confusion.
So, before I list 9 better-than-average mortgage calc tools, it is best that I get you an idea of how to calculate what to put into those fields...
Assessed Value of the Home
The list price on a home is NOT the assessed value of the home. Assessed Value is an amount that the county tax collector feels is fair to charge as your part of paying to keep the county afloat. Much has been written on the subject, but you should count on using X percent of the asking price of the home as the assessed value for the calculator field. Why X? I'm leaving that one blank because...
Steve Chelebian of Midgate Mortgage in Torrance points out that many of those fields simply cannot be filled in accurately no matter what data you might have. Consider the 4 random homes shown below. If you are shopping in the $800k range, you could have wildly different numbers to plug in for assessed value and prop taxes.
EVERY home will have a different story. The takeaway: $800k price = ??? in value and ??? in tax?
"What about the person who bought a house 30 years ago for $50,000 and is trying to sell it now for $1 million? That house may not have been re-assessed in the last 10 years, or assessed differently because of Prop 13, while another home nearby is assessed completely differently." Chelebian said. He said buyers need to get a mortgage broker involved early in the process, so they know where they REALLY stand. I'll go further and say "Start with a mortgage broker, before even using one of these online tools." But there will always be a buyer who just wants to "get an idea" of where they are at. So I will press on....
This field too, can get filled in with truly useless data. L.A. County starts with a .75% property tax, but your local jurisdiction has its own property taxes and possible Mello Roos assessments too. Those MR fees can change the ballgame completely. You can visit SmartAsset.com's calculator to help you estimate what property taxes might be on a given home in L.A. County.
This one is actually easier, and you can plug in a number here that is plus or minus not going to be so wrong that it throws everything off. For condos and townhouses, figure $400/year on the low end to $600 on the high end (w/out quake insurance). For detached homes, start at $800 on the low end to $1500 on the high end.
If you aren't putting down extra money to "buy down the loan" a safe number for closing costs is about 1%-2% of the purchase price on the home. YMMV. On to the 9 calculators.
Rent Vs. Buy Calculators
Monthly Payment Mortgage Calculators
There you have them. 9 calculators. Don't like/trust these? Here are 5 other good calculators. Did I mention that EVERYTHING in this post is for informational purposes only, and that you MUST visit an experienced tax or mortgage pro to get the most accurate picture of your future home purchase. Once you have gotten this figured out, COUNT ON ME to be just as thorough in assessing which homes are truly your dream homes. That's the part I rock!