How Much House Can You Afford?

Mortgage lenders are chiefly concerned with your ability to repay your mortgage. To determine if you qualify for a loan, they will consider your credit history, monthly gross income, and how much cash you’ll be able to accumulate for a down payment (which generally runs anywhere from 5 to 20 percent of the purchase price of the home).

So how much house can you afford? You can easily calculate the answer using two standard debt-to-income ratios:

· The housing expense, or front-end ratio, shows how much of your gross (pretax) monthly income would go toward the mortgage payment. As a general guideline, your monthly mortgage payment, including principal, interest, real estate taxes and homeowners insurance, should not exceed 28 percent of your gross monthly income.
To calculate your maximum housing expense: multiply your annual salary by 0.28, then divide by 12 (months).

·The total debt-to-income, or back-end ratio, shows how much of your gross income would go toward all of your debt obligations that include: mortgage, car loans, child support, alimony, credit card bills, student loans, and condominium fees. In general, your total monthly debt obligation should not exceed 36 percent of your gross income.
To calculate your maximum allowable debt-to-income ratio: multiply your annual salary by 0.36, then divide by 12 (months).

Example :Let’s consider a home buyer who makes $40,000 a year. The maximum amount available for a monthly mortgage payment at 28 percent of gross income would be $933. However, the lender says the total debt payments each month should not exceed 36 percent, which comes to $1,200.

Taxes and Insurance:

Lenders include the cost of taxes and insurance when calculating how much house you can afford:

· Real estate taxes: Because property taxes are part of your monthly mortgage payment, it is important to get an estimate of what yours would be. Be sure to ask your real estate agent or tax office for the rates that apply in the area you want to buy.

· Homeowners insurance: You must insure your property to obtain a mortgage. You can get an estimate of insurance costs from your insurance agent or a major insurance company in the area. Be sure to inquire about special requirements for hazard insurance, such as mandatory coverage for floods, earthquakes, or wind in coastal areas. If you put down less than 20 percent of your home’s value, you also will have to obtain private mortgage insurance (PMI).

Here’s a look at typical debt ratio requirements by loan type:
· Conventional loans
Housing costs: 26-28 percent of monthly gross income
Housing + debt costs: 33-36 percent of monthly gross income

· FHA loans
Housing costs: 29 percent of monthly gross income
Housing + debt costs: 41 percent of monthly gross income

I hope you found this information helpful! Please let me know if there’s anything else I could offer my assistance for!

Good Ideas on Cold Days

While it can be challenging to keep your little ones entertained during the cold months, there are still a few games that are fun playing inside.
My favorite is 123 Redlight. One player stands at one end of the room while the other players stand at the opposite end. The player standing alone says,”One, Two, Three Red light”. The other two players try to get as close as the player talking before the word Red light is spoken. The other two players must freeze when they hear red light. The first player to touch the shoulder of the other wins.

This site has a lot of good ideas.

Now…One..Two…Three REDLIGHT!!!

Happy Friday !

Ever had free time and not wanted to spend a lot of money? Here are a list of things you can do in Atlanta that might peak your interest.

  • Take an art walk.
  • Explore the Atlanta Contemporary Art Gallery.
  • Catch some music in Olympic Park.
  • Watch a movie at the Starlight Drive-In.
  • Visit the Martin Luther King Jr.  Historic Site
  • Walk, bike, or run along the BeltLine permitting..




What Not To Do

Ever wondered what not to do during the loan process? Some helpful points are listed below. 

-Don’t Make an Expensive Purchase

It’s best to avoid making major purchases like furniture, cars, appliances, electronic equipment, jewelry, or vacations until after the closing. Financing large purchases with a credit card could bring your credit score down. Using cash to purchase high-ticket items can also create a problem, because many banks take your cash reserves into consideration when approving your mortgage.

-Don’t Get a New Job

Lenders like to see a consistent job history. Generally, changing jobs will not affect your ability to qualify for a mortgage loan if you’ll be making more money. But, lenders usually look for stability. Changing jobs during the loan approval process could raise some concern and affect your ability to gain loan approval.

-Don’t Switch Banks or Move Money Around

As your lender reviews your loan package, you will be asked to provide bank statements for the last two or three months on your checking accounts, savings accounts, money market funds and other liquid assets. To eliminate potential fraud, most loans require a thorough paper trail to document the source of all funds. Changing banks or transferring money to another account could make it difficult for the lender to document your funds.

-Don’t Disregard Your Lenders Requirements

Even if you have been pre-approved for the loan, your lender will still need copies of your bank statements, W2s and other paperwork. It is up to you to provide all necessary documentation as soon as possible. Failure to submit certain qualifying documents could cause you to lose your loan and the financing you need to buy your home.

I hope these tips are helpful. Please feel free to give me a call if there’s anything I can do for you as it is our goal to make home ownership a reality. 

Nashville, TN

While on a recent trip to Nashville, TN for our yearly company convention, we had the pleasure of visiting some great facilities. It was also a treat to walk through the County Music Hall of Fame. This sparked a quick search of quirky facts.  Here are a few that were interesting.

  1. The AT&T Tower downtown is nicknamed the ‘Batman Building’ due to its resembles of bat ears.
  2. Nashville was founded on Christmas Eve 1779.
  3. In 1941, Nashville was the first city in the country to be granted a FM-broadcasting license.

You can find more interesting facts here:

Credit Score Myths

Myth #1 – My Credit Score Determines Whether or Not I can Get a Mortgage Loan

Not true! Your credit score is important, but it’s only part of the equation. Your credit score gives the lender a snapshot of how reliable you are when it comes to managing your finances. But, the lender also looks at your debt-to-income ratio, employment history, and other factors. In addition, different lenders have different underwriting policies, so it’s best to work with a reliable mortgage consultant to find the best loan program that fits your specific needs.

Myth #2 – Closing Old, Inactive Accounts Will Raise My Credit Score

Not true! Those old accounts are part of your credit history, and a longer credit history helps your credit score. It’s better to keep an old card active and make a small purchase from time to time, or use it to make an automatic payment of a regular monthly bill. Closing the card reduces the total amount of available credit you have. This increases your debt-to-credit ratio and brings your credit score down.

Myth #3 – Paying Bills on Time Will Immediately Improve My Credit Score

Paying bills on time is one of the best things you can do to maintain a good credit score. But, it only accounts for 35% of your total FICO® Score. Your score also reflects your amounts owed (30%); length of credit history (15%); types of credit in use (10%); and new credit (10%).

Myth #4 – My Credit Score Will Drop if I Apply for New Credit

New credit ‒ including credit score inquiries ‒ only accounts for 10% of your credit score. If you’ve applied for many credit cards within a short period of time, you may appear to be “credit hungry” or experiencing financial trouble. However, if you’re shopping for the best rate on an auto or mortgage loan, multiple inquiries within a 14-day period of time are usually lumped into one inquiry.



Reasons to Refinance

Ever thought how much refinancing could help out your situation? Consider these factors listed below.

Lower your monthly payments
Make home improvements
Pay off credit cards
Secure money for college
Restructure your loan (e.g., switch from ARM to fixed)
Convert to a shorter term mortgage

All those points sounds like great reason to just check to see if it is a good move. Don’t hesitate to contact us if you are the least bit curious.

Happy Wednesday !!


Now Halloween is over, what can you do with all those pumpkins? One great idea would be to put some of those fall flowers you have inside your pumpkin and bury it. This way your plant can benefit from using it as it decomposes.

You can also fertilize your garden by smashing it into pieces and mixing in with the soil.  You might wanna remove seeds unless you want pumpkins for the next year.