Mortgage Math For People Who Get Math Anxiety

Mortgage math got you anxious? Don't worry about it. Mortgages aren't about math. Mortgages are about what you choose for your budget, and your future. You got this.

June 15, 2020 by Dan Green

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What type of house do you think you'll buy?

How long do you want your loan to last?

What's your preferred monthly payment amount?

Do mortgage calculations make you anxious or uncomfortable?

You’re not alone. Academia has a word for fear of math – mathemaphobia – and research shows that people with anxiety about math avoid situations that require mathematical thinking.

For home buyers, mathemaphobia means that fear of numbers will keep people from researching their home loans because mortgage research feels like math even when it isn’t.

Mortgages aren’t math. Mortgages are the payment you make to your lender, like with any other loan.

You don’t have to be a “math person” to use a mortgage. You only need to make three key decisions – and none of them are math-related.

Those three decisions are:

  1. How big of a loan do you want for your home?
  2. How many years do you want to give yourself to pay back the loan?
  3. What interest rate do you want to pay on the loan?

When you can answer these three questions, you’re ready to buy your house.

So, let’s say you find a single-family home for sale and you to borrow $216,000 to help buy it.

That’s your first number.

Then, as you imagine yourself living there, you think about whether you want to pay off your home in 15 years or 30 years.

Lenders call this your loan term. Most first-time home buyers choose a 30-year mortgage loan term because the payments are smaller and manageable. Some will choose the 15-year mortgage, though, and that’s okay, too.

The loan term is your second number.

The third number is your mortgage interest rate, and this is a number you can’t choose.

Mortgage rates are made on Wall Street, and they’re non-negotiable to home buyers. Today’s rates average near 3.13 percent for home buyers who want a 30-year fixed-rate loan and 2.58 percent for buyers who want a 15-year fixed-rate loan.

But that is just a starting point!

As a home buyer, you can get a discount on your mortgage rate by paying extra closing costs called discount points. Whether you pay discount points is your choice – discount points are optional. If you choose to pay them, discount points get added to your loan closing costs, and your lower rate lasts for as long as you have the loan.

Now, with your loan size, loan term, and interest rate settled, it’s easy to find your mortgage payment — no math required.

A loan size of $216,000 , with a loan term of 30-year at the current rates for 30-year and 15-year mortgages yields a monthly mortgage payment of $1,000 .

Easy mortgage choices with no math required.

Are you a first time home buyer?

Let us know if you’ve done this before - whether you’re a seasoned pro or buying for the first time. We’ll share the perfect information with you as you need it.

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What's your preferred monthly payment amount?

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