Mortgage Affordability Calculator: The Basics
One of the things included in your bucket list is to have a home that you can call your own. It’s everyone’s goal after all to have a legitimate roof over their heads. The only question left to ask is this: what kind of house can you afford in the current money in your savings? That’s why it’s important to have a mortgage affordability calculator in your hands. A mortgage affordability calculator is an easy way to count how much you’re going to pay for mortgage based on the income that you have. Here are some factors that are considered in some mortgage affordability calculator.
Your annual income
Your annual income is important to the lenders because it helps them figure out if you can have the capacity to pay for the whole loan. This is the combined annual income for you and your co-borrower. You must also include all income before taxes, including base salary, commissions, bonuses, overtime, tips, rental income, investment income, alimony, child support, etc.
The lowdown on the down payment
The amount that you’re going to put in your down payment is also very crucial for your mortgage. Make sure you still have cash left over after the down payment to cover unexpected repairs or financial emergencies and other important fees.
Your monthly debt
Of course you and your co-borrower are not only paying for the home loan. You have other bills to pay like any other adult. Include all of you and your co-borrower’s monthly debts, including: minimum monthly required credit card payments, car payments, student loans, alimony/child support payments, any house payments (rent or mortgage) other than the new mortgage you are seeking, rental property maintenance, and other personal loans with periodic payments.
Make sure to do NOT include: credit card balances you pay off in full each month, existing house payments (rent or mortgage) that will become obsolete as a result of the new mortgage you are seeking, or the new mortgage you are seeking.
Income and property taxes
Income taxes refers to the annual tax that governments place on every citizen’s’ income. This includes federal tax, and other fees. The national average is around 30% but can vary based on income, location, etc.
Meanwhile, property taxes is about the value represents an annual tax on homeowners’ property and the tax amount is based on the home’s value. These two are needed to know how much your mortgage is going to cause.
The homeowner’s insurance
Commonly known as hazard insurance, most lenders require insurance to provide damage protection for your home and personal property from a variety of events. All homeowner’s insurance policies contain personal liability coverage, which protects against lawsuits involving injuries that occur on and off your property. This is very handy especially when emergencies suddenly arose.
People who own condominiums and townhouses have to pay for homeowners association dues (known as HOA fees), to cover common amenities or services within the property such as garbage collection, landscaping, snow removal, pool maintenance, hazard insurance, and lobby maintenance.