FinanceNook.com
Your One-Stop Quality Finance Article Source
 
Submit Your Articles On Auto-Pilot

The borrower wants to know how much can he borrow. First, he went to many website to use the Affordability Mortgage Calculators. He got a quote from the calculator. Second, he asks a mortgage lender. The mortgage lender gave him a quote. Finally, he asks another mortgage lender. The latest mortgage lender gave him another quote which does not match the previous quotes. Nobody is at fault here. Each lender has unique criteria on how much can you qualify for the maximum mortgage loan.

Here are the three common factors to qualify for mortgage loan:
- In Loan to Value ratio, a certain value of property must not exceed the loan.
- In Gross Debt Service (GDS) ratio, a percentage of gross income must not exceed the payment.
- In Total Debt Service (TDS) ratio, a percentage of gross income must not exceed payment, home expenses, and total debt.

Maximum Monthly Mortgage Payment

The borrower earns $120,000 annual gross income. And, he pays $1,500 monthly obligations, $3,500 annual property tax, and $300 annual home insurance. Also, he is contemplating on a 6.5% interest rate and 30 year mortgage. Our affordability mortgage calculator uses GDS 32%, TDS 40%, and Loan to Value Ratio 75%.

Here is the GDS calculation:
= [(annual gross income * GDS rate) - annual property tax - annual home insurance] / 12
= [($120,000 * 0.32) - $3,500 - $300] / 12
= $2,883.33

Here is the TDS calculation:
= ([(annual gross income * GDS rate) - annual property tax - annual home insurance] / 12) - monthly obligations
= ([($120,000 * 0.40) - $3,500 - $300] / 12) - $1,500
= $2,183.33

The maximum monthly mortgage payment is the lesser between GDS and TDS. Your maximum monthly mortgage payment is $2,183.33, since TDS is lesser than GDS.

Maximum Mortgage Amount

Here is the Annuity calculation:
= $2,183.33 [1 - (1 + [6.5% / 100 / 12])-30 * 12 ] / [6.5% / 100 / 12]
= $2,183.33[1 - (1 + [0.005417])-360 ] / [0.005417]
= $345,426.96

The maximum mortgage amount comes to $345,426.96

Loan to value ratio (LVR)

The usual Loan to Value ratio for the first time borrower is 75%. Loan to Value Ratio tells us that the borrower can borrow $460,569.28 with $115,142.32 down payment ($460,569.28 Loan to Value ratio - $345,426.96 maximum mortgage amount).

Here is LVR calculation:
= Maximum mortgage amount / Loan to Value Ratio 75%
= $345,426.96 / 0.75
= $460,569.28

With Affordability Mortgage Calculators, you can easily determine maximum monthly mortgage payment, and maximum mortgage amount that you qualify.

Dennis Estrada is a webmaster of Mortgage Calculators which calculate the mortgage payments, and compare different interest rates.

Article Source: http://www.FinanceNook.com
Your One-Stop Quality Finance Article Source


Listed below are more articles related to the above article.

People interested in the above article "Understanding Affordability Mortgage Calculators" are also interested in the related articles listed below:

Read more related articles in Home | Loans | Mortgages-refinance

FinanceNook.com Home  |  Top of Page
Copyright © 2006 - by Larry Lim, Singapore - FinanceNook.com™: Finance Article Search Engine Directory.
All Rights Reserved. All Trademarks and Servicemarks are the property of the respective owners.

United States of America . United Kingdom . Canada . Afghanistan . Albania . Algeria . American Samoa . Andorra . Angola . Anguilla . Antarctica . Antigua & Barbuda . Argentina . Armenia . Aruba . Australia . Austria . Azerbaijan . Bahamas . Bahrain . Bangladesh . Barbados . Belarus . Belgium . Belize . Benin . Bermuda . Bhutan . Bolivia . Bosnia-Herzegovina . Botswana . Brazil . British Virgin Islands . Brunei Darrusalam. Bulgaria . Burkina Faso . Burundi . Cambodia . Cameroon . Cape Verde . Cayman Islands . Central African Republic . Chad . Chile . China . Colombia . Comoros . Congo . Congo (Dem. Rep.) . Cook Islands . Costa Rica . Côte d'Ivoire . Croatia . Cuba . Cyprus . Czech Republic . Denmark . Djibouti . Dominica . Dominican Republic . East Timor . Ecuador . Egypt . El Salvador . Equatorial Guinea . Eritrea . Estonia . Ethiopia . Falkland Islands and Dependencies . Faroe Islands . Fiji . Finland . France . French Guiana . French Polynesia . Gabon . Gambia . Georgia . Germany . Ghana . Gibraltar . Greece . Greenland . Grenada . Guadeloupe . Guam . Guatemala . Guinea . Guinea Bissau . Guyana . Haiti . Honduras . Hong Kong . Hungary . Iceland . India . Indonesia . Iran . Iraq . Ireland . Isle Of Man . Israel . Italy . Ivory Coast . Jamaica . Japan . Jordan . Kazakhstan . Kenya . Kiribati . Korea (North) . Korea (South) . Kuwait . Kyrgyzstan . Laos . Latvia . Lebanon . Lesotho . Liberia . Libya . Liechtenstein . Lithuania . Luxembourg . Macau . Macedonia . Madagascar . Malawi . Malaysia . Maldives . Mali . Malta . Marshall Islands . Martinique . Mauritania . Mauritius . Mexico . Micronesia (Federated States) . Moldova . Monaco . Mongolia . Morocco . Mozambique . Myanmar (Burma) . Namibia . Nauru . Nepal . Netherlands . Netherlands Antilles . New Caledonia . New Zealand . Nicaragua . Niger . Nigeria . Niue . Norfolk Island . Northern Mariana Islands . Norway . Oman . Pakistan . Palau . Palestine . Panama . Papua New Guinea . Paraguay . Peru . Philippines . Poland . Portugal . Puerto Rico . Qatar . Reunion . Romania . Russia . Rwanda . Sahara . Saint Helena . Saint Kitts and Nevis . Saint Lucia . Saint Pierre & Miquelon . Saint Vincent & The Grenadines . Samoa . San Marino . São Tomé & Príncipe . Saudi Arabia . Senegal . Serbia . Seychelles . Sierra Leone . Singapore . Slovakia . Slovenia . Solomon Islands . Somalia . South Africa . Spain . Sri Lanka . Sudan . Suriname . Swaziland . Sweden . Switzerland . Syria . Taiwan . Tajikistan . Tanzania . Thailand . Togo . Tongo . Trinidad & Tobago . Tunisia . Turkey . Turkmenistan . Tuvalu . Uganda . Ukraine . United Arab Emirates . Uruguay . Uzbekistan . Vanuatu . Vatican City (Holy See) . Venezuela . Vietnam . Yemen . Zaire . Zambia . Zimbabwe


Template Design by Larry Lim | Powered by Article Dashboard

Powered by Article Dashboard