Use A Mortgage Calculator To Determine Your Borrowing Power
If it was easy, everyone would simply walk into a bank
, request a home mortgage and walk out with a wad of cash. Borrowing money these days is a much more complex activity than it has ever been in the past. There are a number of personal information items that need to be dealt with before you submit a loan request. Lenders want to take a look at how much you make to determine how much they can loan. There are other mitigating factors that play into loan approvals. However, you can find out what size of a loan your might qualify for based on this personal information. You need not wait until you begin the loan process to discover how much you can borrow if you us a mortgage calculator.
You and the Lender Disagree
There is a difference between the amount of debt a person can handle on a monthly basis and what the lender believes you can afford. There are different personal financial information factors that weigh in the decision making process a lender makes assigning a borrower as a particular risk. This risk level will, in turn, determine your loan interest rate.
Credit Rate is an Important Factor
Your credit rating is an important factor to plug into any risk analysis. The higher a credit ranking, the lower the lending risk becomes. Higher scores are obtained by maintain a good credit habit history of paying bills on time. Lenders view a higher credit score as indication that a borrower is less than likely to default on a loan. Therefore, a lower interest rate is granted. The other side is also true lower credit ratings will induce lenders to increase the cost for loans made. A higher rate of interest will be charged making the cost of such a loan much higher. Use of a mortgage offset calculator can help gain a glimpse at what interest rate you might expect.
How Much Can You Get?
Although the interest rate may be determined by your credit rating, the lender does need to consider how much money to lend. The next factor that needs to be established by any lender is how much of a monthly repayment a borrower can afford. This determination needs to take into account whatever outstanding debt you presently carry. Heres where use of a mortgage calculator comes into play so you can gain a better understanding of just how the lender will view you during a loan request. The mortgage calculator, when inputted with the correct information, will give you an accurate glimpse at just how much money will likely be approved for a home loan. Examine this example to understand what is needed toward repayment of a home mortgage and how a mortgage repayment calculator can help.
The Calculation Reveals the Amount
Consider that you can obtain a loan at six percent. Also, the term for the loan is established at 30 years this is a normal repayment length of time. Other options can be selected but for purposes here, the following is used:
Six percent interest rate
Length of repayment is 30 years
Real estate annual tax is $3,500
Insurance is $500 per year
Annual homeowner income is $100,000
Monthly outstanding debt is $1,000
Highest monthly mortgage repayment would be $1,667
The highest loan request to be approved would be $263,700
by: David Nalin
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