Refinance Tool

Using an Online Mortgage Loan Calculator?.”How Much Home Can I afford?”

Many sites offer a variety of mortgage loan calculators for use by web surfers and visitors. There are monthly payment calculators, rent versus buy calculators, refinance calculators and on and on. I am taking aim in this series of articles to help you to use these calculators in a more effective way. Today we are going to examine the most widely used calculator, How Much Home Can I Afford Mortgage Calculator. More specifically, we are going to break down how to accurately estimate the qualifying income the mortgage company will consider when you apply so that you can enter that into a mortgage calculator.

The design of this Calculator is to allow you to put in some basic income figures and have the calculator determine what payment your income will support and determine what loan amount that translates to and, by adding a down payment to that figure ….how much home you can afford.

The pathway to answers using this calculator is full of many pot holes. Let us start with the first – income determination. In my two decades of loan origination I have found that there is often a huge difference in what a potential borrower thinks they make versus what an underwriter is going to allow for qualifying. These differences are largest among the self employed crowd predictably.

If you are self employed and file a schedule C:

Your qualifying income is going to be determined by taking your verified schedule C gross income and subtracting all expenses (not including depreciation or depletion – both are paper losses) for the last two years and averaging that into a monthly amount. There is an exception to the 24 month average rule and it is not good…. The exception is if your income is lower in the most recent year versus the previous year it is being averaged with, the lower year will be taken on its own and averaged over 12 months. An explanation for the decrease will be required most likely and if it is significant, evidence that the “bleeding has stopped” might be required as well.

Example:

2009 Gross Self Employment Income 0,000 – ,000 of expenses (not including depreciation) is ,000

2010 Gross Self Employment Income ,000 – ,000 of expenses (not including depreciation) is ,000 net, taxable and qualifying income

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Ordinarily underwriting would take the 80,000 and the 70,000 net figures and average them. In this case, since the 70,000 is the more current figure 2010, it will also be the qualifying income figure.

If you are Self Employed and Own a Corporation.

Whether you are a C Corp or an S Corp, the business tax returns will be required and the corporation will need to be profitable. A loss (not including depreciation) will bring doubt as to whether or not the company can sustain the salary income you might be deriving from it. S Corp losses and gains will appear on your personal tax returns but the corporate returns will still be required and should be reviewed as you work with a mortgage calculator.

If you are W-2 Employee Earning Bonus or Commission or Overtime Income.

You should first determine your base income. This would be your regular hourly rate x 40 hours a week or your regular monthly salary if that applies. Perhaps you are a nurse and work three 12 hour shifts in which case your base income would be your regular hourly rate x 36 hours. Do not use the over time rate in this case for calculating your base income. In summary your base income is going to be established by using your current regular hourly rate or salary figure…no overtime, stipends, bonuses etc. Raises can be taken into consideration immediately when it concerns base income but will need to be evidenced with a paystub prior to closing.

Underwriting will determine your qualifying overtime using a verification of employment but you can simply take your last 24 months of overtime and average it to a monthly figure. Keep in mind that you employer is going to have to verify that the overtime is likely to continue in order to use it and if the overtime is declining it may not be considered. If you have doubts don’t include it in your mortgage calculator.

Please also keep in mind that it is common to claim unreimbursed expenses when you file your taxes. Many people do not even understand these expenses or where they are claimed. If you itemize expenses on your personal Federal Tax returns, it is possible that you are claiming expenses for your job that are not reimbursed by your employer. In the industry we call these 2106 expenses because they are broken out on form 2106 but listed in total on your Schedule A. Typically these expenses will be averaged over 24 months and subtracted from the average gross income figure base pay plus overtime.

The following are general rules in determining income for the online Mortgage Calculator.

Rule One: Monthly Base Income equals:

Current Salary (even if recent raise) evidenced by a recent pay stub.
Regular Hourly Rate x up to 40 hours a week.

Rule Two: Bonus, Commission, Overtime equals:

24 month average if increasing or steady.
Must subtract all unreimbursed job expenses claimed on tax returns

Rule Three: Self Employed Income equals:

Sole Proprietor – Gross Income minus expenses (excluding depreciation and depletion) for the past two years evidenced by tax returns. Must have a minimum of two years in business to count.
Corporate Owner – Salary or wage income plus review of two years of Corporate returns indicating the company’s ability to continue paying your income. Business losses (excluding depreciation) indicate that the company may be unable to sustain your income and underwriting will take this into consideration.

Rule Four: Second Jobs

Must demonstrate a minimum of two years history of holding two jobs continuously in order to have this income accepted.
Income will be averaged over 24 months.

For questions or comments on this article or about using a Mortgage Calculator or Mortgage Qualifying Calculator please feel welcome to contact us hugh@themortgagecity.com

HC Tanner is a California Mortgage Banker for a prominent National home builder and is personally responsible for over 0 million in loan origination volume. Mr. Tanner is an expert in first time home buyer financing. For more information please visit Mortgage Calculator and Mortgage Qualifying Calculator.

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Refinance Mortgage Loan Calculator ? How to choose the right one?

Refinance Mortgage Loan Calculator – How to choose the right one?

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Refinance Mortgage Loan Calculator – How to choose the right one?

By: Penstalker
Posted: Mar 07, 2011

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In today’s changing world and market you can find vibrating rates of mortgage refinance. Seeing the current status you must be thinking of opting for refinance loan. But how can you simply decide the right time for a refinance loan without any pre-calculation or preplans? Therefore to find a perfect time for a refinance loan you can utilize refinance mortgage loan calculator. This calculator can be easily fetched from any of the concerned websites on internet.

Speaking of home refinancing, your intention of taking large amount of loan would be to clear your earlier loan. But you must ensure that you have strong and genuine reasons behind this refinance. Also make sure that you are refinancing at a perfect time. Result of a hasty decision would make you lose your home. Most of the time people tend be concerned only about refinancing rate, but besides this rate you must also think on some more additional charges that would be incurred in the form of your new refinancing loan. A refinance calculator generally considers this charge while calculating the monthly payment.

Among various refinance mortgage loan calculator found on internet the mandatory thing which you would be asked is enter refinance fees. You would find various types of fees asked by some of the lenders. For example loan origination or loan registration fee, loan application fee, loan inspection fee, loan appraisal fee etc. The charge fee normally is different from one lender to another and you can confirm with your respective lender. Sometimes being a borrower you would have to pay certain points equivalent to 1% of lent mortgage loan per point. There is another point called as loan discount point which you would have to pay once in order to lower the rate of interest of your loan.

Always make a point to consider break-even point while deciding to refinance your house. Your break-even point would be post 20 months of time if your payment was 00 which was calculated by refinance calculator. Here you will be saving 0 due to lower rate of refinance. Refinancing mortgage loan is not a trivial thing. Hence before you decide to do it you should think twice on your decision. Also another important point to consider is that make sure that you make use of a professional refinance loan calculator which is a known name in the world of mortgage loan calculator.

Penstalker – About the Author:

Are you looking for EFFECTIVE WAYS to keep your home and deal with your mortgage? Visit Refinance Mortgage Loans website at www.RefinanceMortgage-Loan.net.

Source: http://www.articlesbase.com/mortgage-articles/refinance-mortgage-loan-calculator-how-to-choose-the-right-one-4364652.html

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The True Costs to Sell a Home

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Home Page > Finance > Real Estate > The True Costs to Sell a Home

The True Costs to Sell a Home

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Posted: Mar 30, 2007 | Views: 184 |

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Most homeowners do not realize the true cost involved in selling a home. To calculate the true cost to sell your home you need to include the Realtors commission, repairs, closing costs, holding costs, and offer discount.

How much money will each item cost you?

Realtor’s Commission. When you list your house with an agent, you immediately have to mark up the price to cover the 6% or more commission they make, or else lose that money from your profit margin. On a $200,000 house, you will have to pay a realtor $12,000 just to sell your home!

Repairs. Another overlooked cost is the price you have to pay for all of the repairs and updates to get it ready for listing. Repairs are not only costly, they can take time to complete. These updates can include painting, new carpeting, new flooring, landscape work and minor remodeling. Repairs can cost hundreds or thousands of dollars, depending on the size and age of the house. Major repairs like plumbing, electrical or HVAC systems can easily cost thousands of dollars in fixing.

Closing costs. When you close on a house, you will have all of the fees associated with closing. You have to go through the realtor’s title company and pay fees, and then the mortgage company has fees and any other miscellaneous fees incurred while closing. The closing costs are usually another 3 to 5% of your home sale price. This could be an additional $6,000 to $10,000 on a $200,000 house.

Hidden Costs

Besides obvious expenses to sell your house, there are hidden costs too. Holding costs is the money that you pay while the house is being sold. While your house is on the market, you continue to pay the mortgage, the taxes, insurance, and the maintenance. In today’s slow market, it may take 6 to 12 months before you find a buyer. And when you do get a purchase agreement, you often have to wait another 30, 60 or even 90 days before you can close and get your money!

Also, depending on your region, sale prices range between 88 and 97% of the asking price. With so many houses for sale in certain areas, it has become a buyers market. To sell your house at all, you may need to drastically reduce your price, costing you yet more money.

Do the following math to figure out how much money selling your home with a realtor is going to cost you:

• Start with the asking price of your house.

• On average, the sale price is 4% lower, so subtract 4%.

• Now, take the sale price and subtract 7% of the price for the realtor’s commission.

• Deduct another 3% for closing costs.

• Finally, subtract 4% for the cost of repairs.

How much is left? Not as much as you thought? It’s time to check into some other options if you want to sell your home!

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Marty Orefice -
About the Author:

Marty Orefice is a principal in www.USHomeAssist.com and www.ComproCasas.com, two successful multi-service real estate companies that buy houses in Orlando and Central Florida. If you’re wondering how to sell my house or home fast in Orlando Florida FL without a realtor, then visit us at http://www.USHomeAssist.com.

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