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Starting Out
by Dian Hemer
Inspectors in the House
by Barry Stone
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Pre-qualification is the first stage of the loan origination process. The following screen determines an estimate on how much of a loan you can qualify for.
When qualifying for a loan, no more than approximately 36% of your income can be used to pay for your total monthly payments (Including the new loan). This is the qualifying ratio and will vary between lenders. Your monthly income is used to base your maximum loan amount and maximum purchase price.
To determine the maximum loan amount you can obtain, make a projection to how much down payment you can make. A larger down payment will decrease the loan amount. Increase the down payment by cashing in stocks or other investments, adding a gift (money) from parents, etc. If your down payment does not meet the required amount for the loan your salary will obtain, you will need to re-calculate using either a larger available figure, or lower your debts or interest rate.
Your Available Funds should be a representation of your total savings. This program will use this in several ways. First and most prominent is the Down Payment. Roughly 80% of your available funds will be used for Down Payment, Closing Costs, and Other Costs required to obtain the loan.
Calculations for a pre-qualification worksheet are based on:
- Total Income: (Base, overtime, commission, investments, etc.)
- Debts: Monthly Payments (Credit card accounts, auto loans, etc.)
- Savings: Total of your cash assets (Savings and checking accounts, etc.)
NOTE: Please check with your Lender; you may qualify for a special lending program.
If you have questions or comments regarding the Payment Calculator, please contact us.
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