The Final Steps to Finding an Affordable Home
You’ve found all your pay stubs and done the necessary mathematics that you were told would lead you to find out what your maximum mortgage amount is. The first thing you had to do was to determine your monthly income. Now that you have that figure there is more mathematics to do. Take the amount you came up with for your monthly income and multiply it by the back “ratio” for whatever loan you are applying for. Let’s say for uniformity purposes that we use the number thirty eight percent for the back ratio. So, now you multiply your monthly income by thirty eight percent. The number you come up with is the maximum amount of your monthly income that you should spend on your housing cost and monthly consumer costs together.
The next step is to gather up all of your bills from creditors alone. To determine what you spend monthly on debt you need to total all of these bills. The two items you should not include are your utility bills and your auto insurance premium. When adding the total, just add in the minimum payment for all credit cards. Then you take that amount and deduct it from the total you came up with that you should spend on housing cost and monthly consumer costs. That is, unless the figure is greater than thirty-three percent of your monthly income.
The next steps do not come up with a figure that is set in stone. You just have to guess at these. If you have any idea of what price range you might qualify for you need to estimate your annual property taxes, divide by twelve and you have your monthly taxes. Then you simply subtract that figure from the maximum monthly housing costs total you have already calculated. Now you need to take the figure you’ve come up with and calculate using the current fixed interest rate. Remember to add half a percent to the interest rate if your down payment is not at least twenty percent. To this figure you then add your down payment and you have your maximum purchase price. Well, maybe you sort of have it. You probably won’t have an exact figure because you’re not a professional in this area. The lenders can take that amount and do some magic with it and make it come out to what you need and they will do it at no cost and without any strings attached. They also know about programs that can assist you that you don’t have access to.
Addison Holmes is really into everything about homes, mortgages, loans, and the statistics that come along with them. He wants to show and inform everyone of his wide array of information to help people get the best possible deals, rates, tips, and more. If you are looking for more info, visit stated income mortgage or no doc mortgage loans to find everything else you need to know about these topics.
Author: Addison Holmes
Article Source: EzineArticles.com