qualify

How much of a mortgage can I qualify for?



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we're live John welcome back dude

welcome back how you doing

excellent okay one of the most popular

questions a lot of my clients are asking

me is how much do I qualify for which

directly affects what type of home they

can buy and so I wanted to ask you that

question and this is important starting

the process because once you understand

how much you can have qualify for then

you can go start looking at the homes

and actually get excited about them

nothing's worse John then you know new

families or anybody finding a home

falling in love with it and then finding

out that they don't qualify for it so

give us a step-by-step process of number

one how somebody can find out how much

of a loan they can get approved for

right well the first thing that we would

have to do is go through you know pool

credit we have to take a look at what is

on the credit report as far as your

monthly payments your credit cards if

you have any car payments you know those

are the the first things that we would

look at would be the credit report to

find out what the monthly bills are on

the monthly credit report and then

secondly we're gonna look at the income

and how they calculate most programs on

the loan side you want your debt to

income ratio meaning how much you bring

in a month versus how much is going out

you want that to be around forty-five

percent of your income and that's what

you have to keep everything under so

that's the first thing that would look

as the the credit report to see what you

have going out already

there look at the income in and out of

the term and how much room you have for

your new payment and the property taxes

and homeowners insurance on the new

house okay so so so my brain can

organize this and really break this down

whenever you're talking about the total

debts or total minimum monthly

obligations right we're not talking

about lifestyle we're not talking about

groceries or gas we're only talking

about what actually show not talking

about utility bills so shows up on our

credit report and you gave a couple

examples which are what after they're

gonna look at your your credit cards you

know what them not the you know just

your minimum payment on the credit card

you know you have a monthly minimum

payment you might pay 200 but if your

minimum payments only 50 they're gonna

go off the $50 it's on the credit report

as the minimum any car payments you may

have they're gonna get the car payment

if it's a lease they're still gonna look

at that lease payment because chances

are if your lease is about to run out

you're probably going to go get another

car so they're still gonna count that

lease payment against you

like I said utilities do not get

involved groceries do not get involved

there's a lot of things that you you

know do on a cable they don't look at

any of that stuff because it's not on

the credit report so mainly just

anything that you have currently going

out that you're current on that you're

currently paying that's gonna you know

start add up and then they're gonna look

at your income so if you wanted to kind

of give an example to simplify this say

if you're you know gross monthly income

was five thousand they're gonna use

forty five percent of that five thousand

which would be about twenty two hundred

and fifty dollars and then you start

subtracting from there you know if you

have you know a hundred dollars on

minimum payments on credit cards you're

down to twenty one fifty if you have a

three hundred dollar car payment you're

down to eighteen fifty if that's all you

currently have going out but let's just

say two hundred dollars in student loans

when I deduct that out as well

absolutely if it's not in deferment

there's a lot of there's different

programs but if it's in deferment for a

year or two you most likely would not

have to count that out but on the safe

side I would go ahead and deduct it I'd

rather be safe and gave you real numbers

upfront on a worst-case scenario then

give you I hope we don't have to use it

and then come back or you think you

qualify for one fifty and really really

qualify for one thirty and that's the

you know the type scenario you fell in

love with the house you don't want that

to happen so I always give a worse case

I like to look at everything worst case

upfront that way I can come back better

in the end then to give you the best

case scenario front and come back yeah a

little different okay okay so let's

let's continue with the example that you

said so if my total gross income is five

thousand then forty five percent about

of that is about twenty two fifty so

that's where we start subtracting our

monthly obligations on a credit report

car payment any type of credit cards

student loans if you know if you're

active

we paint on those and so now let's just

use an example that now after we backed

out our monthly obligations we're at

1700 now so what you're telling me is

when somebody when you're figuring out

what somebody qualifies for your you've

calculate it based on the monthly

obligation so now we have 1700 dollars

what does that $1700 include as far as a

house payment well that's gonna be it's

gonna have to be your principal and

interest payment and it's also gonna

have to be the property taxes on that

house as well as your homeowners

insurance on the house you know they're

gonna they're gonna calculate that even

if you're putting more than 20% down in

your house where you don't have to set

up an escrow account escrow account

being your taxes and insurance are

included in your monthly payment even if

you're not setting up escrow account

they're still gonna take a look at what

those costs are and include those into

the debt to income ratio okay perfect so

we got 1,700 dollars to work with that

includes the loan itself the interest

the taxes and your insurance let me ask

you this question does that also include

the homeowners association fees that's

normally something that's separate but

that will get counted into it's not

gonna be in the monthly payment but that

is something also that will get counted

into the debt ratio if you have any

homeowners association fees if you have

CDD fees in some neighborhoods all that

is gonna get looked at divided over 12

months and you know that monthly amount

is gonna be added to your debt to income

ratios okay perfect excellent okay so

monthly obligations directly related to

getting a loan and so we got $1,700 that

all of that stuff associated with the

home fits under now how do you work

backwards to find out the price of the

home without getting too technical all

right the easiest way for me is once I

you know if I know if I have 1700 and I

know what the property taxes insurance

are roughly I can you know let's just

say out of that 1700 we're gonna set 400

a month aside for the taxes the

insurance the HOAs any association dues

so that leaves us about 1300 that we

have to play with for just the principle

and interest payment so

when taking the 1300 our payment you

know rough numbers that say if we're

doing a 30-year loan term you know maybe

around four and a quarter percent today

that would leave me a loan amount of

about two hundred and sixty four

thousand that we can play with I

basically just take what we have left

you know I can I can do it you know I've

been doing this for a long time so I can

take the payment you know the years the

interest and I can back right into a

loan amount to kind of give you an idea

okay this is where you want to start

your search to 64 and below you should

be completely fine to qualify on your

debt to income ratio at that point yes I

love it I love it okay so now that you

know this new family or anybody knows

what they can start searching for once

they find something they have the

confidence that they're able to qualify

for this house you know and go out make

an offer get it under contract and close

within 45 days so this brings them

freedom flexibility confidence and

empowerment and rather than trying to do

this on your own they need to call you

right absolutely I can do it very

quickly as we just demonstrated I mean

once I have the numbers you know I can

calculate it very quickly and get you

into the right house and that's a

payment that's very comfortable for you

that's at the end of the day interest

rate doesn't matter a whole lot a lot of

things don't matter it's what you're

comfortable writing your check out at

the end of the month for that's what you

want to be paying whatever you're

comfortable for and that's what I kind

of really get into and dive into what

are you comfortable on a monthly basis

putting towards the mortgage and then

I'll find you the right house you know

in the right price range for that

payment you're comfortable excellent

love it so again guys be very leery

about online calculators you know person

to persons from somebody that knows what

they're doing long time of experience

and somebody that you trust you know why

not whenever you're making the biggest

investment of your life get solid facts

so you have the confidence so a John

wrote a real quick what's your phone

number and email address plus we'll post

it under the comments below

absolutely phone number is nine zero

four five three five six five three

eight email address is john jo hn dot o

1 o w en at movement mortgage calm

excellent ok we want to hear from you

guys if you have any questions or

comments about this topic and

object let us know and plus anything

else that has to do with home buying and

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answer thanks everybody and check out

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channel we'll talk to you soon thanks

John all right good