The Home Mortgage Qualifying
Chart And the formulas...
Plug the following numbers into your
Home Mortgage Qualifying Chart for our hypothetical borrower, Credit & Personality
Type #4. She is a single borrower with a gross annual salary of $28,500 and home
purchase price of $60,000. Answers will appear later in answer key.
is Type#4's 28% limit for housing debt?
is her 36% limit for total debts?
she fall within the limits?
What Do these Numbers Mean for You?
The chart shows you how much
you can qualify for.
Plug your own numbers into the chart to see how much
you can qualify for. Remember that it's not the end of the road if you fall outside
the percentages by a few points. The guidelines are just those-guidelines. Use
this chart as a tool to calculate approximately what you can afford. Lenders will
treat the guidelines flexibly.
What Are the Pitfalls to Buying?
There is always a risk involved when you purchase a new home. You have to qualify
for the loan, then keep up payments despite higher rates, more household expenses,
moving costs, etc. Be sure you are ready to make that commitment and that you
are covered financially.
2. You have to clean up your credit. Pay off those
debts and save some money for a down payment and closing costs.
3. If you
aren't a first-time homebuyer, you may be looking at a higher down payment. First-timers
often get a break with low down payment requirements. Be sure you have enough
saved if this isn't your first home.
4. Once you buy a new home, you are
locked in again for a few years. You can't pick up as easily and move without
losing financially. Be prepared to stick it out in the new location.
You have to qualify for the loan and go through the lender's tests. There is always
a risk of having to wait until you can meet the guidelines required for your new
That's It...The Self Assessment Section
ready for a pop quiz? Click on the icon below to test what you have learned. Be
sure to review the sections of the course related to your WRONG answers!
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