Calculate Your Mortgage Payment
There's no shortage of ways to calculate your mortgage payment, the Internet is full of mortgage calculators to calculate approximately how much a mortgage payment will be. Click on any mortgage calculator—such as this one on my personal website, this one at Bankrate or this one at the Mortgage Calculator — just enter the relevant numbers and check out the results.
You’ll see a box to plug in the mortgage amount, interest rate, term (in months) and start date. The result will give you the principal and interest portion of your mortgage payments amortized for the life of the loan, typically 15 or 30 years.
However, you won't see or be provided with what the loan will actually cost you and more importantly you won't know if you will actually qualify for the loan.
The number will simply be an approximate and more or less get you into the ball park. Typically, if you have reasonably good credit, you should calculate your mortgage payment to be no more than 28 percent of your gross income. However, if you’re debt-to-income ratio is high, your mortgage should in most cases be less.
Whether or not you think you can afford a specific mortgage payment, it's your lender that you should consult with and obtain a pre-approval letter from. Lenders are the people that loan money and have lots of facts and figures on their side (called actuary tables) that tell them the risk is high for default if your debt-to-income ratio is high.
Other than a mortgage payment you also need to remember there are other costs associated with buying a home such as homeowners insurance, association dues (for condominiums or neighborhoods with shared-responsibility such as common areas), closing costs, money to be set aside for future maintenance (new roof, gutters, paint, etc.) and extra purchases that you might have such as: new furniture, a lawn mower, plants for the landscaping, etc.
So, if you’re ready to buy a home... saved money for a down payment, have paid down your credit cards so you're using no more that 30% of available credit and don't forget about the car payment so that your debt is low... then take the time to consult with a mortgage lender to see if you can get pre-approved for a loan. Of course, if you don't have a lender I'd be glad to refer you to one of my lenders I like and have worked with for years. Once they know your financial picture and have plugged in the numbers (your income, expenses, debt, etc.) they'll be able to can give you the actual amount that they believe you can afford on a monthly basis and will pre-qualify you.
Also, with a pre-approval letter in hand, you can be confident that when you submit an offer it will get more serious review and consideration!
If you have questions about getting pre-approved for a loan, email or give me a call. I can point you in the right direction.
Adapted from original content published at.... http://nicktpappas.com/?p=3934
Photo courtesy of Stuart Miles/freedigitalphotos.net
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