Mortgage

4 Tips to Determine How Much Mortgage You Can Afford

By knowing how much mortgage you can handle, you can ensure that home ownership will fit in your budget.

Here are six surefire ways you can get your finances in order before you buy a home.

Homeownership should make you feel safe and secure, and that includes financially. Be sure you can afford your home by calculating how much of a mortgage you can safely fit into your budget.

Instead of just taking out the biggest mortgage a lender qualifies you to borrow, consider how much you want to pay each month for housing based on your financial and personal goals.

Think ahead to major life events and consider how those might influence your budget. Do you want to return to school for an advanced degree? Will a new child add day care to your monthly expenses? Does a relative plan to eventually live with you and contribute to the mortgage?

Still not sure how much you can afford? You can use the same formulas that most lenders use, or try another of these traditional methods for estimating the amount of mortgage you can afford.

1. The general rule of mortgage affordability
As a rule of thumb, you can typically afford a home priced two to three times your gross income. If you earn $100,000, you can typically afford a home between $200,000 and $300,000.

To understand how that rule applies to your particular financial situation, prepare a family budget and list all the costs of homeownership, like property taxes, insurance, maintenance, utilities, and community association fees, if applicable, as well as costs specific to your family, such as day care costs.

2. Factor in your downpayment
How much money do you have for a downpayment? The higher your downpayment, the lower your monthly payments will be. If you put down at least 20% of the home’s cost, you may not have to get private mortgage insurance, which costs hundreds each month. That leaves more money for your mortgage payment.
The lower your downpayment, the higher the loan amount you’ll need to qualify for and the higher your monthly mortgage payment.

3. Consider your overall debt
Lenders generally follow the 28/41 rule. Your monthly mortgage payments covering your home loan principal, interest, taxes, and insurance shouldn’t total more than 28% of your gross annual income. Your overall monthly payments for your mortgage plus all your other bills, like car loans, utilities, and credit cards, shouldn’t exceed 41% of your gross annual income.

Here’s how that works. If your gross annual income is $100,000, multiply by 28% and then divide by 12 months to arrive at a monthly mortgage payment of $2,333 or less. Next, check the total of all your monthly bills including your potential mortgage and make sure they don’t top 41%, or $3,416 in our example.

4. Use your rent as a mortgage guide
The tax benefits of homeownership generally allow you to afford a mortgage payment—including taxes and insurance—of about one-third more than your current rent payment without changing your lifestyle. So you can multiply your current rent by 1.33 to arrive at a rough estimate of a mortgage payment.

Here’s an example. If you currently pay $1,500 per month in rent, you should be able to comfortably afford a $2,000 monthly mortgage payment after factoring in the tax benefits of homeownership.

However, if you’re struggling to keep up with your rent, consider what amount would be comfortable and use that for the calcuation instead.

Also consider whether or not you’ll itemize your deductions. If you take the standard deduction, you can’t also deduct mortgage interest payments. Talking to a tax adviser, or using a tax software program to do a “what if” tax return, can help you see your tax situation more clearly.

G.M. Filisko is an attorney and award-winning writer who’s owned her own home for more than 20 years. A frequent contributor to many national publications including Bankrate.com, REALTOR® Magazine, and the American Bar Association Journal, she specializes in real estate, business, personal finance, and legal topics.

Mortgage

Rebuilding Credit To Get A Mortgage

Often, especially in this market due to the recession, we find potential home buyers who have had a life event or “bump in the road” that affects their ability to obtain a new loan. If you want to buy a home, you will have to have a certain number of reporting trade lines and for certain length of time. MOST mortgage programs require 3-5 trade lines and a minimum of two years of reporting. The other criteria is the actual credit score-which generally has to be 620, 640 or even 660 as it is all lender dependent. A manual underwriting where they use alternative credit such as rent payments, cell phone bill, utility bills, and the cable bill might be able to be used-but only with a few certain programs and lenders. So, the best bet is to re-establish credit as quickly as possible. HOW ABOUT NOW!! Don’t wait-it will only extend the time until you are going to be eligible. I have put together a list of resources that might be helpful. This list is only a starting place for your research. If you find another good resource please post it in the comments below so that the list can be expanded upon.

TOP IDEAS FOR CREDIT RE.doc

Mortgage

Mortgage: Effective Household Investment for Financial Autonomy

Mortgage: Effective Household Investment fBy Natasha Anderson

If finances had a copyright, we would have bought it by now. But it is hardly sold anywhere near the place we live. So, when we decide to take a mortgage it becomes highly perplexing for it is something you are not used to. Taking out a mortgage is not like an everyday errand. Mortgage in the simplest terms mean long-term loan used to finance the purchase of real estate. As the borrower, or mortgagor, you repay the lender, or mortgagee, the loan principal plus interest, gradually building your equity in the property. In a mortgage, you can use your property but not the title of it. When you pay the mortgage, you own the property.

You must have heard that interest rates on mortgage are at their lowest. There is no doubt that they are declining, lending new opportunities to homeowners to get the financial funding they require. Mortgage has become more competitive and easy to get. Competition among loan lender is rising therefore it has lot of potential for homeowners. So it is no surprise to know that mortgage is mounting among people.

Today’s consumers have many different mortgage types to select from. Mortgages have been flavoured with different interest rates for the benefit of the mortgage applicants. The more recognized mortgage types are fixed, variable and balloon mortgage.

Mortgage has been publicized everywhere as a real good loan plan for every homeowner. However, it is essential to realize that mortgage is in itself a very exhaustive term. There are innumerable sub categories.

Mortgage types are meant to be for your benefit. Two major types of mortgages are available – repayment and interest only mortgage. Repayment mortgage is the traditional, old fashioned mortgage where the property is guaranteed and is yours only at the end of the loan term provided you repay the loan. The monthly payment on Mortgage compiles capital repayment and interest payments. Capital repayments repay the loan amount your have taken. Interest payments provide repayments for the interest on the loan. Every month you keep on paying a little of both the loan and the interest till the whole loan is repaid.

Interest only mortgage is a relatively new term. In an interest only mortgage the capital is not repaid directly. The capital on a mortgage term is repaid at the end of the mortgage term while simultaneous investments are made to an investment fund. The idea is to make this fund flourish so that at the end of the term there is enough money to pay the mortgage and also leave capital for your personal usage. The term ‘interest only mortgage’ might seem inviting but the capital has to be paid at the end of the mortgage term.

Interest only mortgage comes in all shapes and sizes. However, this kind of mortgage is not meant for every borrower. Each Interest only mortgage is meant to cater to the needs of a specific kind. It is very fundamental to learn about the interest only mortgages before you apply for one. The interest only mortgages are endowment mortgage, individual savings account mortgage, pension mortgages.

In this highly elaborate work structure of mortgages it is pivotal to find the precise mortgage. Precise mortgage type requires some basic steps which begin with knowing what you want. Loan borrower must be very clear about their requirements and their limitations. Once you know which mortgage type to take – make comparisons. Compare the mortgage types. Mortgage is essentially a buyer’s market. Shop around. Compare the APR. The real comparison is through comparing the APR, which is the annual percentage rate. The APR takes all the costs into account: the application fee, the mortgage lenders valuation and so on.

A mortgage broker is a good idea with respect to mortgage. A mortgage broker is a licensed company or an individual that gets the best mortgage plan available at the best possible rates. Mortgage broker signifies convenience. They will do the legwork for you. Usually mortgage brokers don’t cost any extra fee because they usually work on the fees given by the mortgage lender. However, sometimes you can get a better deal by going to the mortgage lender directly.

Mortgage and bad credit are very compatible. The only thing a loan borrower can do is to be open and honest about their bad credit status. Hiding your credit status would only go against your mortgage claim, when there are in fact easier ways to get a mortgage with bad credit.

Mortgage is like easy if you make the right choice. Getting a good mortgage is directly dependent on your knowledge of a mortgage. To know every nook and cranny of mortgage can be not possible. Since even the most judicious professionals may also not be aware of some of the mortgage details. However, basic mortgage knowledge will not only protect you against fraud and abuse but also stimulate financial gains. So maybe you don’t have the copyright to financial sense; you can still find a mortgage.

After having herself gone through the ordeal of loan borrowing, Natasha Anderson understands the need for good quality loan advice. Her articles endeavor to provide you the wise counsel in the most elementary way for the benefit of the readers. She hopes that this will help them to locate the loan that beseems their expectations. She works for the Uk secured loans web site.

To find a Secured loan or mortgage that best suits your needs visit [http://www.ukfinancewprld.co.uk]

Article Source: http://EzineArticles.com/?expert=Natasha_Anderson
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Mortgage

Minnesota Mortgage Broker Can Outline Your Options

Minnesota Mortgage Broker Can Outline Your Options
Renters Have Much to Gain by Pursuing Home Ownership

By Patti Mazzara, Vice President
Venture Development Inc.

Edina, MN – Buying a home vs. renting is a big decision that takes careful consideration, as most mortgage consultants will agree. But the rewards of home ownership are great. For many years, purchasing real estate has been considered an extremely profitable investment. It is an achievement that offers a sense of pride, financial stability and potential tax advantages.

Yes, there are certain responsibilities associated with owning a home. Landlords will often argue the benefits of renting, and for obvious reason. If you are renting, you’re helping them make their mortgage payment.

The numbers are staggering if you look at it this way. If you are paying $1,000 per month for an apartment, and you know your rent will increase 5% every year, then over the next five years you will pay your landlord $66,309. If you are currently renting a house, you may be paying much more than that each month. Either way, you gain no equity by shelling out this monthly housing expense and you certainly won’t benefit when the property value goes up!

However, if you were to purchase your own home or condominium, you would be well on your way toward building equity within that same five-year period. By choosing a fixed-rate loan program, you can have the comfort of knowing that your monthly mortgage payment will never go up. In fact, you would have the option of refinancing to a lower interest rate at some point in the future should interest rates drop, and this would cause your monthly mortgage commitment to go down.

In addition to building equity, there are tax advantages that come into play with home ownership. Depending on your tax bracket, owning a home is often less expensive than renting after taxes. Interest payments on a mortgage below $1 million are tax-deductible, and your mortgage consultant should help you evaluate the tax advantages of various loan scenarios, and share this information with your tax consultant to glean feedback on your behalf.

To find the loan program that is right for you, your mortgage consultant will need to evaluate your monthly household income, current assets and savings, as well as any monthly obligations you may have for credit card payments, car payments, child support, etc. These prequalification factors, along with the report of your credit score, will determine how much house you can afford and what interest rate you will pay for financing. It is also important to let your mortgage consultant know what your future goals are, because this will help narrow down which loan option is the best fit for your long-term needs.

There are many different types of loan programs available, including “low” and “no” down payment mortgage programs. These types of programs require the borrower to provide less than 3 percent of the loan amount as down payment. FHA lenders rule that the mortgage payment, including principal, interest, taxes and insurance (PITI) should not exceed 31 percent of your gross income, and the PITI plus other long-term debt (car payments, etc.) should not exceed 43 percent of your gross income.

Housing is an expense that takes a big bite out of the monthly budget. If you are a renter and feel that “home” is more than just someplace to hang your hat, think about the advantages of purchasing real estate. It may be time to take the step into building your personal net worth as a home owner.

Patti Mazzara is with Venture Development Inc., a MN Mortgage Broker.  We work with Minneapolis and Saint Paul Minnesota home buyers.  Visit our website:  www.ventureloanapp.com to see why we are the Twin Cities Mortgage Broker first time home buyers call.

Mortgage

Minnesota Mortgage Broker Discusses Life After Bankruptcy – Is It Possible?

Edina, MN – Bankruptcy is an uncomfortable subject for a variety of reasons. The most obvious is the potential havoc it can wreak on your finances when obtaining a mortgage loan. Running a close second is the negative stigma which is often attached to the process. This negativity is important to mention because strong emotions can sometimes lead to unsound financial decisions with devastating results.

Bankruptcy becomes a viable option for someone who is “upside down” in terms of cash flow. In other words, when a person has more money going out each month than coming in, bankruptcy should be considered if no reversal of this negative cash flow is within sight. The longer someone waits to explore the various options available, the more serious his or her situation may become.

One of the worst things people can do in this situation is to borrow more money to try and pay off their debts. On paper, this is clearly an unwise financial decision. In the real world, however, it is very common for individuals to pursue this strategy in an attempt to buy time and hold off on filing for bankruptcy. On the surface, this is certainly a noble notion; however it can often compound the problem and serves only to delay the inevitable.

For many homeowners in the midst of this upside down cash flow, speaking to a qualified mortgage professional like Venture Development http://www.ventureloanapp.com is a much better option. An experienced loan officer can objectively look at your finances and help you determine if restructuring your mortgage would not only help, but possibly even alleviate any need for bankruptcy.  Please visit our web page to learn more about debt consolidation http://www.ventureloanapp.com/debt_consolidation.html

If bankruptcy is the only option, seek out a reputable bankruptcy attorney and credit counselor. A qualified mortgage specialist can provide references for you as well, as he or she works with these professionals on a regular basis. Reliable references are essential in this case because experienced professionals greatly increase the odds of a successful bankruptcy experience. It’s that simple.

When filing for bankruptcy, be completely honest and accurate regarding every aspect of your financial situation. This includes any changes to your income which may occur throughout the process. Bankruptcy is a federal procedure, adjudicated by real judges, and scrutinized by representatives who coordinate with the Department of Justice, the FBI, and the IRS.

Here are some additional steps you can take to make the bankruptcy process as painless as possible:

•Save all paperwork regarding your bankruptcy, and keep it organized. This will prove beneficial after your bankruptcy as you now have all of the pertinent information in one place. Also, be sure to write down your discharge date or keep a copy of the discharge paper that is stamped and dated. It’s surprising how many people forget to do this.  Keep these records available in the event that you will you will be required to show the bankruptcy documents for a future home purchase or refinance.

•Establish a household budget. This can be accomplished in many ways, but there are several inexpensive computer programs available which do an excellent job.

•Throughout the bankruptcy, do your best to not only live below your means, but to save as much cash as possible. You never know what you may need it for once the process is completed.

•Be prepared for a barrage of junk mail. There will be sharks on the loose who are hoping to capitalize on your need for credit.

Tips for Rebuilding Credit:

•If you must buy a car, focus on transportation as opposed to style. Buy an inexpensive, used car, and try to get a loan for it. It’s a good idea to figure out what your budget allows in terms of a dollar amount first. This means obtaining financing prior to looking for a car.

•Get a secured credit card. Secured credit cards allow for the cardholder to deposit a said amount of money into an account, thus establishing the spending limit of the card. Missed payments result in deductions from the account. Some of these cards will reward responsible borrowers by upping the limit without an additional deposit. Some will even convert the account into a traditional credit card. (Be wary of offers of “easy credit” or any card which asks you to call a 900 number. You will be charged for the call.)

•Meet with a credit repair specialist. Not only can they help you clean up the damage to your credit report, they can advise you on specific ways to rebuild the credit you lost as well.

While it does take time, there is definitely life (and credit) after your MN bankruptcy. Some mortgage lenders will even lend to you within a year or so after a bankruptcy. If you’re in serious financial trouble, the trick is to get the help and advice you need from professionals you trust.

Call us – Your Twin Cities Mortgage Broker!  We help people in Chapter 13 purchase and refinance in Minnesota.