How Much Of A Mortgage Do I Qualify For?
Thursday, July 13th, 2006
I can’t count how many times I have read people post in forums or email me about wanting to buy a house but don’t have a clue how much of a house they can afford to buy. Let’s face it, no one wants to go house shopping and find that dream home only to hear “Mr. Smith, I have good news and bad news. Good news you qualify for a home loan, just not the one you want. Let’s look a few that don’t cost so much.” Man that’s a bummer.
Continuing our series on our financial calculators, we are going to focus on the Mortgage Qualification Calculator. This calculator is designed to calculate the amount of mortgage you can qualify for based on a series of variables that you enter.
Let’s look at a sample scenerio. Let’s say Mr. Smith and his Spouse earn a combined $80,000/ yr, has $1000 in monthly debts, has $10000 to put as a down payment, and have been told that their interest rate would be 6.25%. They also figure to pay $40 / mth for homeowners insurance and $75 / mth for taxes.
With this inforamtion, we see that the Smiths qualify for a 140,000 + house and can expect a mortgage payment of around $820/mth. Now remember these numbers are only estimates and you would probably be safe looking at houses in the $140,000 - $160,000 price range, depending on how well you feel you can negoiate with the homeowner. This calculator also assumes a 5% minimum downpayment and the actual mortgage qualification results could be higher based on your unique circumstances.
Even taking into account the variables, the mortgage qualification calculator is a good tool to use when starting out on your house hunting journey.
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