Qualifying For a Mortgage – How Much Can I Afford?
Key Components
Components of a mortgage payment include the principal (dollar amount of loan) and the interest cost, taxes and heat. These figures combined equal your mortgage payment.
Insurance
Sometimes other costs, such as insurance payments and Homeowner’s Association (HOA) fees can be included as part of the mortgage payment. Borrowers must obtain fire insurance prior to closing on a home, but the payments may be made in a lump sum or can be paid for separately. If you borrow more than 80% of the home value, you will also be required to pay for Private Mortgage Insurance.
Taxes
In many cases, mortgage companies escrow monies to use for paying property taxes and homeowner’s insurance. These payments are often included as part of the mortgage loan payment, but sometimes a borrower can opt out and pay the fees to the parties directly. Whether you pay them as a part of your mortgage payment or pay them independently, be sure to include the expenses when determining your total monthly expenses.
Mortgage Calculators
To determine the maximum amount a borrower is eligible for, a mortgage broker will use one of several calculators or formulas to help you decide the mortgage payment you are comfortable paying and if your income is sufficient to satisfy a lender. To see the Averbach Mortgages calculators, click here.
Other Debt and Expenses
Other costs that should be considered to determine how much you can afford to borrow include property taxes and payments for other debts such as credit cards. When determining your total monthly payment, you would be wise to include your monthly expenses for telephone, electricity, water and cable as well as any other regular payments you make.
The more accurate and complete information you provide your mortgage broker, the better he or she will be able to match you with the lender that will best be able to meet your needs.
