If 2 people both are govt workers, and they are thinking of buying a home for $280,000, their monthly expenses, utilities are $220, maintenance is $ 100, property tax $380, home ins $50 and the only debt is a car loan of $350.
her income is $55,000yrly and his $38,000 yearly and they saved $60,000 in a money market and earned $5,840 ly and they plan to use 20% for down payment and closing costs, a lender is offering a 30 yr variable rate loan with an initial rate of 8% given a 20% down payment and closing costs equals to $1,000 plus 3 points
before making the purchase offer and applying for the loan they need to know if they qualify
1) estimate the the affordable mortgage and purchase price and if they qualify what factors might they consider before buying and taking out a mortgage and what future changes might present a problem first I had up the monthly expenses then add their income together, then divide their income by 12 to get the monthly income, add their money market and interest together , then take 20% of the house value to get the down payment amount, to get the amount to borrow subtract the cost of the house from the down payment, we know that they had $60,000 + $5,840 in interest to use towards the down payment, so now the amount they have to mortgage is $226,328 for 30years with 3 points (3%) multiply that by the amount to mortgage then subtract that amount to get the total amount borrowed
the contract rate is 8% then the interest rate multiplied by the contract rate to get interest I need to find the APR. I need to decide if they qualify for the mortgage and if they do what should they consider before taking the mortgage and buying the house and what change could occur inthe future all I need is to check the way the problem is done and how to get Apr and what the monthly mortgage might be
Please see the attached Excel spreadsheet detailing your answer.
To briefly answer your questions:
1. They would qualify for the mortgage. Their monthly income would be 7,750 while the total expenses on the house would be 2,744 leaving them an excess of 5,006 each month.
2. They would be able to cover the cost of the downpayment of approx 56K as they have the 60k in savings and the approx 5k in the money market fund.
3. Other things to consider wheny buying a house:
A mortgage loan is no small thing. It is a long period commitment that usually stays with you 15 to 30 years of your life. Because of this, so many important things have to be thought and planned about and so many factors will be ...