![]() ![]() Please consult your own financial advisor. In this scenario, your monthly housing payment would be $2,024.33, with $1,540.80 going toward your mortgage, $250.00 for taxes, and $125.00 for insurance.ĭISCLAIMER: There is NO WARRANTY, expressed or implied, for the accuracy of this information or it's applicability to your financial situation. A home loan affordability calculator is an online tool that is available on the websites of lending institutions. For example, with a $28,900.00 down payment and a 30 year mortgage at 5.875%, you could afford a home that cost $289,300.00 if your gross monthly income is $8,000.00 and your total monthly expenses other than your mortgage payment are no more than $910.00. With this information, you can get a general idea of how much home you can afford. In simple mode, which is available by default, the calculator works as a mortgage affordability calculator.To perform the calculations, you have to complete only three fields: Your maximum payment The maximum amount you can pay each month towards repaying the mortgage (i.e., the money you can afford to spend on housing). Typically, your front/back ratios should be in the range of 28%-33%/36%-42% and no higher than 35%/45%. The "back ratio" is the percentage of your gross income needed to cover both housing and all of your routine monthly expenses such as food, transportation, clothing, etc. ![]() For example, if you bring home 5,000 a month, your monthly mortgage payment should be no more than 1,250. We recommend keeping your mortgage payment to 25 or less of your monthly take-home pay. The "front ratio" is the percentage of your gross income related to your housing costs, including property taxes and insurance. That’s why it’s important to know what you can afford before you ever start looking at homes with your real estate agent. Your estimated front and back ratios are used to compare your housing expenses with your other normal living costs. You should include costs for taxes, insurance and private mortgage insurance (if needed). Also consider how much money you have for the down payment, the loan interest rate, and the length of the loan. Find out by taking a closer look at your total monthly household income, as well as all of your other debts and regular monthly payments. Before you start looking for a new home, you should have an idea of how much you can afford to pay monthly. ![]()
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