Remember to help your clients figure in insurances , utilities, possible repairs /replacements etc. I just had some renters contact me who figured they coud make monthly house payments with what they paid out in rent. If only it was that easy!
#535
A man is applying for aconventional loan with an LTV of 90%.
He has a monthly income of 3000 dollars a month.
His total monthly recurring debt obligations equal 500 dollars.
What is the maximum monthly mortgage payment that this buyer will qualify for ?
A. $580
Here's how it works.
3000 total monthly income
*
0.36 or 36% of monthly income for mortgage
=
1080 total for mortgage
-
500 in additional recurring debt subtracted from the maximum allowable for the mortgage
=
580 dollars total available for mortgage payment36% is the standard for lending if there are other monthly debt obligations
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Good reblog, Kathleen. Many first-time buyers need our help, especially when it comes to finances. Sometimes, it doesn't make sense for them to buy, especially when their rent is very low and it won't go up. I have had a couple of instances when families living in subsidized housing could never buy a home where their payments would be anywhere close to their current expense. But, there is also a lifestyle to think of, and that is usually better when you own and you call the shots.