$350,000 Mortgage: Total Cost And Other Factors To Consider

If you’re thinking about purchasing a house sometime fairly soon, it’s important to develop a home buying budget that will suit your needs and long-term financial goals. Perhaps that budget is a $350K mortgage.

Let’s take a look at the total cost of a $350,000 mortgage and your monthly payments based on various scenarios, including your interest rate and loan term. We’ll also explore some factors to consider before applying for a $350K mortgage, as well as how to get one.

Monthly Payments On A $350,000 Mortgage

When you take out a mortgage of any size, you can expect to pay some upfront costs (which we’ll get into later) in addition to some monthly expenses, which include the principal and interest components of your mortgage loan, plus property taxes and insurance. Next, we’ll consider each of these.

• Principal: The principal is the total loan amount you borrowed to purchase your home, and you’ll pay it off monthly over the course of your loan’s repayment term.
  
  
• Interest: Also part of your monthly payment is interest, which is the money you agreed to pay your lender for providing you the funds you needed to make a home purchase. The amount you’ll pay in interest each month will depend in part on your interest rate, which is a percentage of your remaining loan amount.
  
  
• Taxes: No matter where you decide to call home, you’ll pay yearly property taxes. The amount you’ll need to pay to your local government will vary with the property tax rate for your area and your assessed home value.
  
  
• Insurance: Two common types of insurance that must be factored into your monthly payment are homeowners insurance and mortgage insurance. Homeowners insurance provides financial protection against some natural disasters and accidents that may occur on your property. Not every homeowner has to pay mortgage insurance, but your lender may require it to protect their investment in the event of a default on your home loan.

Crunching The Numbers

Let’s take a look at your estimated monthly payment on a $350,000 mortgage for a variety of fixed interest rates as well as both a 15-year loan term and a 30-year term. Note that this table accounts only for principal and interest. Property taxes, homeowners insurance and mortgage insurance aren’t included.

As you can see above, borrowers with a 15-year term mortgage pay more each month than those with a 30-year term. However, homeowners with a 15-year loan term usually secure a lower interest rate along with paying off their debt in half the time and saving thousands of dollars over the life of the loan.

Factors To Consider Before Applying For A $350,000 Mortgage

In addition to your monthly mortgage payment, you’ll want to consider several other factors before applying for a $350,000 mortgage. Let’s break them down one-by-one.

Down Payment

Depending on the kind of mortgage loan you sign up for, you may be required to make a down payment on your home. In any case, you’ll have a more manageable monthly mortgage payment the more money you put down upfront.

That’s because your principal mortgage balance starting out will be less than if you put no money or less money down. On a conventional loan, which you can sometimes get with a down payment of as little as 3% of the purchase price, it’s best if you can put down no less than 20%. That way, you can avoid paying private mortgage insurance (PMI) and having extra PMI fees included as part of your monthly mortgage bill. Take into consideration your current savings and how much of that you’re planning to contribute to a down payment.

Closing Costs

Closing costs are another one-time expense you need to plan for when taking out a mortgage. In most cases, you can expect to be required to pay 3% – 6% of the loan amount in closing costs. That comes out to somewhere in the $10,500 – $21,000 range on a $350K mortgage.

Closing costs often include the following fees, although not all home purchase transactions have the same closing costs:

• An application fee
  
  
• An attorney’s fee
  
  
• A closing fee
  
  
• A courier fee
  
  
• A credit reporting fee
  
  
• A homeowners association transfer fee
  
  
• A loan origination fee
  
  
• An appraisal fee
  
  
• Escrow fees

Loan Term

As we briefly touched on above, you’ll need to decide on a loan term for your mortgage. You can choose between the common 30-year and 15-year term options, or you may be able to go with a far less common 20-year term.

If you have the means to pay more per month, you may be best opting for a 15-year loan, while a 30-year loan is likely the best option if you can’t afford to make higher monthly payments at the time of purchase.

Adjustable-Rate Vs. Fixed-Rate Mortgage

One of the most important decisions you’ll make concerning your loan is whether to go with a fixed-rate or an adjustable-rate mortgage. With the latter option, your interest rate will be set for a period of several years – known as the fixed period – after which it can change every year or so based on fluctuations in market rates.

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