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Refinance Home Home Loan First Time BuyerExample : The first time buyer's salary of 35,000 a year, monthly debts on credit report : minimum credit card monthly payments = $ 110 and a car payment of $190. So take the 35,000 and divide that by 12 = 2916 then times that by 42% = $1225 subtract the buyers monthly minimum debt 2915- 110 - 190 = 925. Now you have to subtract from this number potential property tax and insurance 925 -120 -50-50 = 705 So, the income of the first time buyers allows for a 705 monthly principle and interest mortgage loan payment if the buyer has a yearly salary of 35,000 and a current monthly minimum debt payments of 300. Using 705 is good starting point because depending on credit and other factors the ratio of 42% can vary and go up to 50%. Use the qualifying for first time buyer chart to determine the loan amount/new home sales price to find what to look for. If rates on the 30 year fixed rate mortgage are 6.125% and 705 is the allowable PI payment then divide 705 by 6.06 = 116,000 so a first time buyer in this scenario can qualify and should look for a sales price of $116,000. First Time Home Buyer Qualifying ChartBelow is First time buyer rate chart. After you have computed the monthly allowable payment find the average interest currently offered. Then divide that amount by the respective ratio to the current rate. This will give you a general first time buyer qualifying loan amount/sales price. Example : If you have determine that $915 a month is available to be used for your principle and Interest (PI) and that the current rates are 6.5 then divide 915 by 6.5% RATIO. 915/6.33 = 144,550 is the sales price/loan amount for the first time buyer.
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