Description

Use this tool prior to going to see a lender. It duplicates the financial calculation the bank will conduct to see how large a mortgage they are willing to provide based upon what they think you can afford. The banks / lenders typically work at three factors when determining how much you can afford:

• Housing expense to income ratio
• Debt to income ratio
• Cash requirements

When to Use

• Buying a new home
• Considering re-financing your current home
• You wish to pay off a loan early
• Thinking about trading up

What information you will need

To effectively use the financial tool kit it is best to have the following on hand:

• Information about your current or prespective new homes
• Paycheck stub(s)
• Copy of property taxes paid
• Home insurance premium amounts
• Most recent tax return
• Credit card statements
• Loan statements
• Mortgage statements
• Other debts

Note: You do not need to have all this information to use the tool, but the more you have available, the more accurate the calculation.

Step 1: About the new property (or mortgage)

Step 2: About your current Income

Step 3: Identify your Debts (what you owe others)

Step 4: Identify cash and assets available for your New Home AND estimate your closing costs.