.........FINANCIAL PRE-QUALIFICATION BEFORE YOU BEGIN HOME BUYING.........

By
Real Estate Broker/Owner with CHRISTOPHER LADD HARKER LLC

    PREMIERE PLUS REALTY, CHRISTOPHER LADD HARKER LLC, REALTOR
    Office free 866-738-5517 Pay 239-455-1977 Free fax 941-375-3658
                 CHRIS CELL 239-682-0182
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Pre qualify for home mortgage

To determine How Much Home Can You Afford, use this Freddie Mac calculator (first you may want to completely read this whole report).  

For those interested in how it is calculated, use the Work sheet at the bottom of this report.

Traditionally when persons bought a home, they made 20 percent of the home's price as a down payment. But times are changing and lenders no longer require 20 percent down payment. Some loans require as little as three percent down which means you can finance a larger amount of the purchase price. You may be surprised to find that you are able to buy your own home, when you are thinking it can not be done. The very first thing to do is to be pre qualified.

Freddie Mac was chartered by Congress to provide a continuous source of capital to finance America's housing. The U.S. Department of Housing and Urban Development (HUD) oversees Freddie Mac. Chris wishes for you to use their Calculator to be pre qualified.

There are many calculators on the internet, but this Freddie Mac calculator is an excellent choice. Also, at this point, when you are only using my site to learn about real estate, it is none of Chris's business how much you earn and other financial information that is private. We do not put  calculators on our sites (like so many others do) because we do not want to collect any of the private information the calculators need.

To calculate the affordable price range to fit in your budget, use the Freddie Mac site. There is a form for you to enter a few numbers about your income and expenses, and it will give you a very rough estimate of the home price range that you are financially qualified to buy. The calculator is based on the standard affordability ratios used to determine qualification for mortgage approvals.
  • The housing payment ratio (known as front ratio) compares the being-calculated monthly mortgage payment to your monthly income.
  • The total debt ratio (known as back ratio) compares your total monthly obligations, including this being-calculated mortgage payment, to your monthly income.

To determine How Much Home Can You Afford, please use this Freddie Mac calculator  

You may also Want to Investigate by using some of the other Freddie Mac family of calculators  

For those interested, here is a discussion of these standard affordability ratios used to determine qualification for mortgage approvals. The ratios 28 and 36 are commonly used ratios. These numbers can be changed up or down by lenders, making it harder or easier for you to qualify for a given price range home.

The 28 refers to the percentage of your gross income, before taxes, that may be spent on this new home mortgage expenses, such as principal, interest, real estate taxes and insurance(s). These new mortgage expenses may not exceed 28 percent of your gross income.

The 36 refers to the percentage of your gross income, before taxes, that can be spent for payments on all your current debts, such as credit cards and car payment, plus the new mortgage payment. These total expenses for the new mortgage and other debt expenses may not exceed 36 percent of your gross income.

The How Much Home Can You Afford calculator above does all of the math for you. But you can do some math yourself if you want, using Chris's worksheets below.

 

Worksheet A

Monthly Income (before taxes)

 

Borrower

Co-Borrower

  Total

Base employment
income

 

 $_______

 $_______

   $______

Overtime

_______

_______

_______

Commissions

_______

_______

_______

Interest/dividends

_______

_______

_______

Other

_______

_______

_______

Monthly Income Total

 

             A==>

$______

 

Worksheet B

Monthly Outgo on Existing Obligations

 

Automobile loan

_______

_______

_______

 

Student loan

_______

_______

_______

 

Credit cards

_______

_______

_______

 

Alimony, etc.

_______

_______

_______

 

Other

_______

_______

_______

 

Monthly Outgo Total

 

 

 $_______

B==>$ ____

 

Worksheet C

Monthly Home Mortgage Payment

 

Mortgage payment (principal & interest)

______

 

Real estate taxes

______

 

Insurance premiums

______

 

Home Mortgage Payment Total

 

$_____

C==>$_____

Worksheet D

 

 

Monthly Mortgage + Monthly Outgo

  B+C        

D==>$_____

 

Worksheet E Take the dollar amounts from Worksheets above:

For the housing expense ratio,
      Divide C by A

___________    28%

For the all debt payments ration,
      Divide D by A

___________    36 %

  

THANKS. Christopher Harker                                        

YOU CAN'T MISS WITH DEANE and CHRIS

        CALL US NOW - DON'T YOU WAIT

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