Affordability Calculator

This mortgage calculator can be used to figure out monthly payments of a home mortgage loan, based on the home’s sale price, the term of the loan desired, buyer’s down payment percentage, and the loan’s interest rate. This calculator factors in PMI (Private Mortgage Insurance) for loans where less than 20% is put as a down payment. Also taken into consideration are the town property taxes, and their effect on the total monthly mortgage payment.

How We Calculate Your Home Affordability Estimate

We estimate your home affordability based on your annual income, down payment, monthly spending, loan type, and current average APR.

Annual Household Income

In order to determine how much, you can afford to pay each month, we start by looking at how much you earn (salary, wages, tips, commission, etc.) each year before taxes. This should be the combined income for people searching for a home together.

Monthly Spending

Once we have your monthly expenses, we can more accurately determine how much money you have left to spend on a monthly mortgage. Take into account debt (car loans, student loans, credit cards, etc.), recurring payments (insurance, utilities, subscriptions, etc.), groceries, and even savings that would not go toward your mortgage, when calculating your monthly spending.

Loan Type

There are several types of mortgage loans, but the most commonly used are fixed-rate and adjustable-rate loans. Fixed-rate loans have the same interest rate for the entire duration of the loan. That means your monthly payment will be the same, even for long-term loans, such as 30-year fixed-rate mortgages. Two benefits to this loan type are stability, and being able to calculate your total interest up front. Adjustable-rate mortgages (ARMs) have interest rates that can change over time. Typically, they start out at a lower interest rate than a fixed-rate loan, and hold that rate for a set number of years, before changing interest rates from year to year. For example, if you have a 5/1 ARM, you will have the same interest rate for the first 5 years, and then your interest rate will change from year to year. The main benefit of an adjustable-rate loan is starting off with a lower interest rate.

Loan Term and Interest Rate Options

The monthly amount of your mortgage payment depends on loan term (duration) and interest rate. Generally, a longer-term loan will have lower monthly payments, but at a higher interest rate, so you’ll end up paying more money overall. You can build up your credit or save for a larger down payment to qualify for a lower interest rate. A lender can also help determine a financial plan, and present the best loan payment loan term and interest rate for your needs.

APR (%)

The Annual Percentage Rate (APR) is a number designed to help you evaluate the total cost of a loan. In addition to the interest rate, it takes into account the fees, rebates, and other costs you may encounter over the life of the loan. The APR is calculated according to federal requirements, and is required by law to be stated in all mortgage loan estimates. This allows you to better compare different types of mortgages from different lenders, to see which is the right one for you.

Annual Property Tax (%)

As a homeowner, you’ll pay property tax either twice a year or as part of your monthly loan payment. This tax is a percentage of a home’s assessed value and varies by area. For example, a $500,000 home in San Francisco, taxed at a rate of 1.159%, translates to a payment of $5,795 annually. When you buy a home, you will typically have to pay some property tax back to the seller, as part of closing costs. Because property tax is calculated on the home’s assessed value, the amount typically can change drastically once a home is sold, depending on how much the home raised or decreased in value.

Monthly Mortgage Payment

When calculating how much home you can afford, we estimate how much you will pay each month toward your mortgage. Your monthly mortgage payment will include principal and interest. It can also include property taxes, homeowners’ insurance, homeowners’ association (HOA) fees, and private mortgage insurance (PMI) if your down payment is less than 20 percent. Additionally, it’s a good idea to budget one percent of your home price for home upkeep, repairs, and maintenance.

Down Payment

The typical rule of thumb is to pay 20 percent of the home’s price as your down payment, although some mortgage loans require as little as 3.5 percent down. Your down payment reduces the total amount of your mortgage loan, so the more money you put down, the more expensive a house you can buy. At the same time, you can put more money down to decrease your mortgage payment each month. Use the affordability calculator to see how your down payment affects your home affordability estimate and your monthly mortgage payment.

Homes in Your Price Range

We use your home affordability estimate to determine which for-sale homes you can afford to buy in the location you specify.

Credit Scores

Though we don’t factor credit scores in our home affordability estimate, it is an important factor in qualifying for a loan and determining interest rates. Generally, the higher the credit score, the lower the interest rate will be for most loans. This means you’re the overall payment will be lower. Even lowering your interest rate by half a percent can save you thousands of dollars.

Financial Documents

Here are a few documents to help you understand your financial situation and how much house you can afford:

• Recent statements from all bank and investment accounts
• Pay stubs and W-2 income tax forms
• Total monthly expenses, including all bills, groceries, clothing budgets, etc.
• All of your assets, including stocks, 401(k), IRAs, bonds, cash, rental properties, etc.
• All debt including credit cards, student loans, car loans, mortgages, etc.
• Credit score
• Profit and loss statements if you are self-employed
• Gift letters if you are using a gift to help with your down payment

Price Negotiation

We love helping buyers find the perfect property, but we love the ways in which we can help them buy at the very best price with the very best terms even more. Sometimes negotiations aren’t all about price. A great contract can involve other seller concessions that create the right deal for our clients.

Real Estate Market Data

We spend a great amount of time and effort collecting market data to assist our buyers with their price negotiations. This data involves not only sold property prices by neighborhood, but also current listing prices to determine the competitive nature of the market.

It’s Not all Money

There are a lot of ways to negotiate a real estate deal and they don’t always involve money. Perhaps the seller doesn’t have a lot of ability to work with you on price, but they can make other concessions that could result in a deal. We can assist you in taking the best approach.

It’s Not Over till it’s Over

Many real estate price negotiations involve multiple counter offers and a lot of back-and-forth. We are with you with each counter offer to adjust your negotiation strategy accordingly. Because we can’t know the seller’s financial limitations in many deals, some buyers are elated when they cut a major low-priced deal on a property. However, after inspections they hit a brick wall in negotiations with the seller in relation to repairs.

Contract to Closing – We are always with you

It’s both exciting and stressful negotiating a real estate purchase contract. Once that’s done, there are still more negotiations, document deliveries, inspections, title details and mortgage tasks to be accomplished to reach a successful closing and walk away with the keys to your new property. There are more than 50 specific due dates and tasks on our average transaction checklist. An overview of our tasks includes:

• Post contract delivery of documents to the title company and ordering of a title binder or commitment.
• Deposit of earnest money and delivery of receipt to the buyer client.
• Helping our buyers and investors order, coordinate inspections and provide access to ensure they’re completed on time.
• Coordinating timely delivery of any documents objecting to disclosures, inspection results or title binder issues.
• Coordinating appraisal and appraiser access.
• Working with mortgage company and coordinating delivery of documents they require.
• Assisting buyers with any negotiations related to contingencies, inspections or documents.
• Constant monitoring the status of all processes at the title company.
• Our company is your “go-to” resource to bring it all together; constantly monitoring those 50+ document delivery items, maintaining contractual deadlines and working diligently on our project requirements. We ultimately strive for a speedy and smooth transaction to get you through to a successful closing!

Contact Us

When buying a home, you and your needs matter most. I will get to know you, your priorities and your must-haves to ensure we find the right home for you. Whether you’re searching for your dream home, considering land development opportunities, or looking for community , we tailor our services to your unique real estate needs. Faruk will provide the industry knowledge, local expertise, and personalized attention across the spectrum of the real estate market. Contact Faruk today. Call/Text Faruk Now (562) 213-8892 for a FREE Consultation.