If you want to request your own first time homebuyer purchase plan packet, email james@castlerockmortgagellc.com
Section A: Begin By Determining Your Potential Loan Amount
Ten Steps to Estimating Your Current Home Purchase Power
1.
What is your current gross (pre-taxed) monthly household income? $____________________
What is the sum of all of your monthly household debt payments (car loans, credit cards, student loans)? $_______________________________
The most common qualifying guidelines allow you to devote 25-30%1 of your gross monthly income to your mortgage payment (principal, interest, taxes and insurance or PITI) and 38 -50% of your gross monthly household income to your combined debt payments (mortgage, car loan, credit cards, etc.)
2.
mortgage payment between
$______________________ and $ .____________________________
Using the above qualifying guidelines for your income and debt, it appears you could qualify for a total (PITI) monthly
3.
How long do you expect to live in your home? (Average is 5-7 years) ____________years
4.
Using the information above and for the purpose of this plan, the following estimate will be based on the current interest rate of ________%2 for a _______-year________ rate loan.
fixed/adjustable
5.
$_______________________ and $ .______________________
Based on the information provided, an estimated loan amount for this type of mortgage would range between
(Please note the range could be different for other types of loans)
6.
How much in savings/investments do you currently have ready to use for a home purchase? $____________________________
7.
Where were you thinking of buying a home?_____________________________
8.
approximately $_____________________
In this area, closing costs generally run______ % of the mortgage amount. The closing costs and prepaids will be
Prepaids are that part of your loan closing costs which must be collected at closing to cover taxes, interest and insurance.
9.
may add to your monthly payment costs. We can discuss financing alternatives and also find out if you qualify for a down
payment assistance program.
That appears to leave you with enough money to make a down payment of approximately $_______________If this amount is less than 20% of the home purchase price, you may need to pay for private mortgage insurance which
10.
range.
An estimated mortgage amount range, plus anticipated down payment, gives you an idea of a home purchase price
Lower price range estimate:
Mortgage amount $___________________
+ Down payment $___________________
= Purchase price $___________________
Higher price range estimate
Mortgage amount $____________________
+ Down payment $______________________
= Purchase price $_______________________
:
1
options.
There are programs available with expanded qualifying guidelines. The example uses 25-30% and 38-50% as an illustration only. We can discuss other
2
The actual annual Percentage Rate (APR) for this loan will be higher to reflect the total cost of the loan. We cannot calculate the APR at this time.
Section B: Look At The “Big Picture” Cost Of Homeownership
There’s your mortgage payment:
A. Principal and interest $_____________________________________
loan)
(gradual repayment of the amount borrowed plus the interest charged for the
B. Property tax $______________________________________
(estimate as _____% of your purchase price for an annual cost)
C. Homeowners Insurance $______________________________________
(annual coverage costs to protect your home from hazards can be estimated as______% of the home’s value)
D. Mortgage Insurance $ _______________________________________
may be available)
(may be required if your down payment is less than 20%; financing alternatives
E. Homeowner Association Dues $ _________________________________________
(common fees for condominium, co-ops and townhome owners)
Total Mortgage Payment
The lender looks at your total monthly mortgage payment to see how it balances with your monthly income. They also will
look at your total monthly debt (like credit cards and other loans) to see how that debt, plus your total monthly mortgage
payment balances with your monthly income.
To get yourself comfortable with your monthly expenses, you should also keep the costs of managing a home in mind.
When you are ready to place an offer on a home, have your real estate agent ask the seller for a copy of the home’s utility
bills. Also, when you have your home inspection, be sure to discuss what repairs need to be done immediately with the
inspector and get estimates.
$
Please remember that your estimated purchase price range is based on:
•
range could potentially be higher.
Current interest rates. If rates increase, your range could potentially be lower. If rates decrease, your purchase price
•
Your current income. If your household income were to increase, your purchase price range could be higher.
•
purchase price range could be.
Your current savings. The more money you have saved and the larger your down payment, the higher your
•
change.
One product type. If you choose or require a different type of mortgage loan, your purchase price range could
•
your other debt (such as auto, student and personal loans and credit card balances) allowing you to devote 38% to
50% of your pre-tax monthly income to your total monthly debt, depending on the loan product.
Your estimated mortgage payment. Most mortgage guidelines consider your estimated mortgage payments PLUS
Section C: Talk About Credit
Your credit history and debt obligations are important factors in your ability to be approved for a mortgage. The good news
is that there are different kinds of mortgage financing available – even for those with credit challenges or more than the
average debt. Of course, if you have good to great credit and little debt, there may be benefits like low interest rates and a
reduced amount of paperwork.
It would be inappropriate to speculate about your ability to be approved until you are ready to make a formal loan
application. But it is highly recommended that you look into your credit while you are still in the home purchase planning
stage.
Have you seen your credit report lately?
•
You can request one free credit report per year from each of the credit reporting agencies by contacting
www.annualcreditreport.com
or
Equifax Experian Trans Union Corporation
www.equifax.com www.experian.com www.transunion.com
1-800-685-1111 1-888-397-3742 1-877-322-8228
•
improve it.
You can also go directly to the Fair Isaac Corporation (FICO) for your credit score and guidance on ways to
Calculate your monthly debt obligations
Review your monthly debt to see if, when combined with your estimated monthly mortgage payment, it falls between 38%
and 50% of your pre-tax monthly income.
If your monthly mortgage payment plus your monthly debt payment is greater than 38%-50%
work to reduce your debt. Start by targeting credit cards with the highest interest rates.
before taxes, you should
Stay Motivated. Keep your Credit In Good Shape.
•
believe are inaccurate.
Check your credit report at least twice a year for errors, including account activity and late payment entries you
•
receipts and explain the error in detail. By law, they must review your account and respond to you in writing within 30
days.
Write a letter to the credit agency and the creditor if you find any errors. Include copies of any cancelled checks or
•
Pay your bills on time.
•
first.
If you have a lot of debt, you may want to target one or two high interest rate accounts and work on paying those off
•
every month.
If you have a limited credit history, apply for a credit card and use it for small purchases, paying off the balance in full
Section D: Set Purchase-minded Goals
What if you don’t think you can purchase the home you want even with little or no down payment?
Think of your first home as a stepping stone to the home of your dreams and consider looking into one or more of the
following alternatives.
•
Homes in lower priced areas
•
Smaller homes with less land or fewer amenities
•
“Fixer-upper” homes
•
Condos, co-ops or two family homes
•
Whether you need more money to qualify for a mortgage or to be able to buy a more expensive home, setting hard and
fast savings goals is one way to get there.
Wait until you’ve saved more money
Prepare To Go The Distance
Total Amount You Think You Need:
$ _____________________________________(including closing costs, down payment and a savings cushion)
Your Current Savings:
$______________________________
Difference:
$___________________________________________________________ (depending on your circumstances, this is how much you may need to save)
Purchase Date Goal:
$___________________________________________
Number Of Months Away:
$________________________________________
Monthly Savings Goal:
$___________________________________________________ (move closer to your goal month by month)
Find A Home You Can Purchase
Do you know if there are homes in this price range in the area where you would like to buy?
Have you checked online at Realtor.com?
Here are some Realtors® who can help you look for a home in this price range:
1. _______________________________Phone Number_________________________
2.________________________________ Phone Number_________________________
3._________________________________ Phone Number________________________
â–¡ Yes â–¡ Noâ–¡ Yes â–¡ No
Stay Motivated. Take Money-Saving Steps!
•
Open a dedicated savings account to save for your first home purchase
•
You could choose to have a set amount automatically deposited in the account every month including:
o
A reasonable portion of your paycheck
o
Money you’ve been spending on non-essentials
o
Money you receive from raise or a bonus
o
Other__________________________________________________________
o
Other__________________________________________________________
Some aspiring homebuyers qualify for local down payment assistance programs.
Here are some area programs to look into:
1.___________________________________________________________________
2.___________________________________________________________________
3.____________________________________________________________________
