With my mortgage calculator, you are able to self-generate pre-approval letters as long as the scenario falls within guidelines that I set for your specific situation.
When I release this to you, I have carefully prequalified your Income, Debts and Assets.
The max loan amount is driven by Payment. Since every property and scenario is different, I’m empowering you with the ability to input PRICE, DOWN PAYMENT, TAXES, INSURANCE, HOA dues to calculate a monthly payment that works.
Most loan programs allow Debt-to-income ratios up to 50%. So in this case, the max payment would be a bit over $2100.
Considering the Down Payment and other components of this property’s monthly expense, the max price is determined at $250,000.
Understand that changing components of this payment will influence the max loan amount. For example, if you are looking at a condo with a higher HOA fee (let’s say $600). This expense eats into the max monthly payment. And as a result the max buying power drops ...to $215k was the number that works to keep DTI under 50%.
Rate is also a big factor in buying power. For example, let’s use a rate that’s 1% lower… this increases your buying power by $20k for this same scenario to max the DTI.
Discount points typically costs 2:1. For example buying down the rate by 1% can cost 2% of the loan amount. So in this example, buying down the rate from 7% to 6% on a $270,000 loan could cost $5400, on top of regular closing costs.
You can pay for this, or in the right situation negotiate it into your contract as a seller credit.
I hope you find this helpful.
Pauline@indmortgage.com | (617) 965-1988 x205 | www.indmortgage.com