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Includes:
- Income
- Loans
- Savings / Savings Accounts
- Debts
- Other Expenses
- $65,000 Annual Salary
- $300 Monthly Car Payment
Your Debt-To-Income Ratio:
$300 per month = $3,600 annually
$3,600 / $65,000 = 5.5% (about 6%)
- Good Percentage
Includes Cash Reserves Such As:
- Savings
- Funds
- Individual Retirement Accounts (IRA)
- Stocks
- Down Payments
- Gifts
Value of the property and other possessions that you're pledging as security against the loan.
In the case of a mortgage, the collateral is the home that you're buying
An appraisal will be done to compare the fair market value to the mortgage amount
- Protects you from overpaying on the value of a house
- Protects the lender's financial interest
Lenders check your credit score and history to assess your record of paying bills and other debts on time
Credit score dictates the interest rate you get and how much of a down payment will be required
It is a good idea to monitor your credit so that you will be in a good position to buy a house in the future
Before you begin searching for the right home to buy, you'll need to search for the right kind of mortgage to help make the purchase
Not backed by the federal government, and they come in two types: conforming and non conforming
- Borrowing costs tend to be lower
- Can pay as little as 3% down
- Sellers can contribute to closing costs
- Can have a minimum credit score of 620, however a much higher down payment will accompany that score
- Significant documentation required to verify income, assets, down payment, and employment
If you have a strong credit score and can afford to make a sizable down payment, a conventional loan is your best pick.
The US Government isn't a mortgage lender, but it does help Americans become homeowners.
A Few Government Agencies that Help with Mortgages
- Federal Housing Administration (FHA)
- US Department of Agriculture (USDA)
FHA
Convenient for those who:
- Don't have large down payment saved up
- Low Credit
USDA
Convenient for:
- Moderate to low-income borrowers
- Those looking to buy in a rural area
- Unsaved Down Payment Costs (Most do not require a down payment)
Pros
- Credit requirements are relaxed
- Don't need a large down payment
- Available to repeat and first-time buyers
Cons
- Loan limits are lower
- Can be location restrictions
- Could have more fees involved
Convenient for those:
- Who can not put a huge amount of money down
- Buying a home for the first time
I'm prepared to offer you 3 options today based on the figures below.
- Annual Income: $65,000
- Monthly Income (before taxes): $5416.67
- Monthly Tax Rate: 25%, or $1,354.17
- Monthly Income (after taxes): $4,602.50
- Monthly Income (after $300 car payment): $3,762.50
I recommend a maximum monthly payment of $2,000, which should bring your total mortgage amount to $285,000.
*This number can change based on new information*
- Budget of $285,000
- Down Payment of 3.5%: $9,975
- Total Mortgage: $275,025
Much more freedom and choice when looking for a place to live!
- Total Budget: $285,000
- Down Payment not required!
- Total Mortgage: $285,000
Why USDA?
- No major down payment
- Saving money up front
- House might not be in a location allowed by USDA.
- Stay where you currently are
- Begin to save monthly
- Monitor your credit
Reevaluate in a year and see where you're at. You may be able to afford the home of your dreams!