How to Calculate Your Louisiana Mortgage
Use a Louisiana mortgage calculator to determine what you can afford and how to reduce your monthly payments.
Before you buy a home in Louisiana, you should know how to calculate your mortgage based on the sale price. This will help you determine whether you can afford the home and what steps you can take to reduce your monthly payments.
You can get a rough idea of your buying power by using our Louisiana mortgage calculator.
What goes into a mortgage payment?
Mortgage payments usually have at least four components: principal, interest, taxes, insurance, and, possibly, an HOA fee.
Principal. The principal is the total amount of the loan you receive. If the loan is for $300,000, this is the principal.
Interest. The interest is the cost of borrowing money. The amount of interest you pay depends on your current loan balance and the interest rate for the loan.
Taxes. The taxes you must pay are property assessments by the local government. Your lender usually holds them in an escrow account until the due date.
Insurance. Insurance protects you from certain risks. Your insurance payments will also be held in an escrow account until they are paid to your insurance provider.
Three types of insurance may be incorporated into your monthly mortgage payment: homeowners insurance, flood insurance, and mortgage insurance.
- Homeowners insurance protects you so that you are not on the hook for thousands of dollars if and when your home is damaged by theft, fire, wind, or other hazards.
- Flood insurance is a specific type of insurance that protects you against raising flood waters that are not covered under homeowners insurance.
- Mortgage insurance protects your lender if you do not repay your mortgage; you can avoid getting it if your down payment is large enough, typically 20% of the purchase price of the home.
HOA fee. A homeowners association (HOA) fee is a monthly payment to a homeowners association in order to help maintain and improve the properties and grounds subject to the HOA. You want to know whether the home you’re thinking of buying is under the jurisdiction of an HOA and, if so, the amount of the monthly fee and how fees will be spent. HOA fees sometimes add a lot to a mortgage payment.
Ways to Lower Your Mortgage Payment
You can reduce your monthly mortgage payment by doing one or more of the following:
- Refinance your mortgage to obtain a lower interest rate.
- Avoid paying for mortgage insurance by reaching 20% equity in your home or by making a down payment of 20% or more. You may also be given an option of buying the mortgage insurance outright with a one-time fee.
- Ask for your mortgage term to be extended.
- Appeal your property taxes if you believe that they’re too high.
- Get quotes to compare homeowners insurance rates.
Estimating Your Louisiana Homeowners Insurance
In 2020 and 2021, four major hurricanes hit Louisiana, and the smaller insurance companies that had been lured back to the state by financial incentives after Hurricane Katrina were quickly tapped out. Today, many of these insurers have already left the state. With less competition and more risk to contend with, the insurance providers that remain are charging higher prices.
In addition to the insurer’s general assessment of risk, the cost of your homeowners insurance depends on your credit profile and on the size, location, and age of your home. Homes that are closest to waterways tend to have the highest insurance premiums. Having a higher credit score, a smaller home, and a less vulnerable location will help make your premiums more affordable.
Buying a New Orleans home may be the biggest purchase you’ll ever make, and you should be well-informed about your financing options before making a final decision. Contact our Realtors for help in determining what you can afford to buy and how much you will need to spend each month on mortgage payments.