In this article, we will dive deeper into what you see inside your results in the Affordability Calculator. Keep reading to learn more.
What's Inside the Results
- At the top will be displayed what your client is able to afford along with their proposed DTI ratio. Use the slider to change the price of the home. Adjusting the slider updates all of the charts and figures below to the new home price.
- The displayed Mortgage Payment Breakdown chart breaks down the total monthly payment and shows how much of the payment is going towards principal and interest, taxes and homeowners insurance.
- Budget Ranges show how much home the customer can afford, based upon their DTI tolerance. For example, to keep a DTI below 30%, Budget Range would determine that they could afford less home than if their DTI was above 30%.
- Closing Costs Estimate will estimate the total amount of funds needed (down payment and closing costs) to buy a home at the value listed above. Use the slider to adjust the closing cost amount.
At the bottom of the page, you will find an Overview table that displays all of the information from the scenario.
Affordability Calculator Definitions
Below you will find definitions to the terms used within the Affordability Calculator.
Annual Income
Enter the total annual income for you and your co-borrower before taxes. Include any commission, overtime, investment income, etc.
Interest Rate
This will be the rate for the loan you will receive.
Length of Loan
This determines how many years that the loan will be paid off. We assume a 30 year loan in this situation.
Down Payment
The amount of money you can afford to put towards a home. We recommend you have more savings in case of repairs needed or any unexpected financial emergency
Monthly Obligations
The amount of debts you pay on a monthly basis. Include things such as student loans, credit card payments, car payments, etc.
Property Tax
This is the estimated property taxes you would pay yearly.
Homeowner's Insurance
Also known as hazard insurance, Homeowner's Insurance provides protection for your home burglary, storms, fire and more. The value represented would be the yearly cost of the insurance policy.
DTI Tolerance
Our Debt-To-Income tolerance allows you to set the threshold for your total monthly Debt-To-Income ratio. This takes into consideration your monthly obligations, insurance, taxes and other expenses to suit your needs. The assumed Tolerance is 43%, some loans may allow up to 55%.
Mortgage Insurance
Mortgage Insurance is typically required when the down payment is below 20%. This is a policy to protect lenders against losses that may occur when a borrower defaults on their mortgage. There is an option to include Mortgage Insurance, and then set the annual rate to be paid.
Maintenance Fee
This field can be used as a monthly expense for an investment property or for an HOA fee normally comes along with buying an apartment or condominium.