Prequalifications

Establish Your Budget…

Estimating Expenses before Buying Your First Home

YOUR BUDGET can be the most Important Part of Buying a home.
Our Home budget includes a format that covers all aspects of your Life.
We want you to be able to afford Your Home until, you decide to Sell..

A few areas of your budget, that are not usually covered are:

  • Moving Cost
  • Deposits
  • Community assessments
  • Anticipated Taxes
  • Projected Utilities, depending on sq. footage.& insulation values
  • Maintenance of your New or Older Home.                                                                                                     Yes! You have to start planning on Maintenance even if you buy a New Home.

If you’re buying an existing home, RCM plans on researching local inspector’s available to project future maintenance cost. Then you will be able to use this information as a negotiating tool with the seller or projecting your future capital requirements.

The RCM online format, will give you access to Mortgage Brokers and Financial Institutes that will guide your decision to finding the right mortgage that meets your Personal budget. Pre-Approval of a Mortgage Commitment will be available. Note Mortgage section:


STEP 1: DETERMINE NET MONTHLY INCOME

GROSS MONTHLY INCOME

Gross base pay (all wages and salaries other than overtime) $_____________________
Net profit (from business) $_____________________
Interest and dividends  $_____________________
Other income  $_____________________
   
Total Gross Monthly Income $_____________________

 

PAYROLL DECUCTIONS

Income tax (federal, state and local)  $_____________________
Social Security/retirement  $_____________________
Insurance (life, health and property) $_____________________
Other  $_____________________
   
Total Payroll Deductions $_____________________


Total Net Income           $_____________________

 

Step 2: Determine Monthly Expenses 

LONG-TERM MONTHLY OBLIGATIONS (MORE THAN 11 MONTHS)

Car, #1 $ ____________________
Car  #2    $ ____________________
Furniture $ ____________________
Education Loans $____________________
Other debt $ ____________________
Other debt  $_____________________
   
Total Long-term Monthly Debt  $_____________________

 

MONTHLY NON-HOUSING EXPENSES

Food, beverages (home and work)

  • Dinning out
  • Takeout
  • Coffee
  • Lunch at work
  • Groceries
  • Other
$_____________________

Transportation/auto expenses

  • Insurance
  • Yr. License /Fees
  • Tires
  • Maintenance
  • Oil and Gas
  • Cleaning
  • Other
$_____________________

Education

  • Books
  • Computer
  • Software
  • Maintenance agreements
  • Phone (Home, Cell, iPad)
  • Insurance on Equip.
  • Other
$_____________________

Medical/dental care

  • Insurance
  • Medication
  • Vision
  • Health spa
  • Other  
$ ______________________

Clothing and grooming

  • Hair Stylist
  • Clothing
  • Shoes (shoes, polish/repair)
  • Gifts Holidays
  • Other
$________________________

Insurance (life and health)

  • Whole Life
  • Term Ins.
  • Other
$_____________________

Child care

  • Food
  • Gifts
  • Other
$_____________________

Gifts and charity

  • Church
  • Other
$_____________________

Entertainment and recreation

  • Membership
  • Events
  • Subscription
  • Movies
  • Music
  • Hobbies
  • Travel Vacation
  • Other     
$_____________________

Utilities

  • Water
  • Sewer
  • Natural .Gas 
  • Electrical
  • Propane Gas
  • Oil
  • Phone/Wireless Service
  • Home entertainment
  • Educational
  • Business
  • Solar maintenance?  Purchase
  • Other
$_____________________
Savings   $_____________________
Other  $_____________________
   
Total Monthly Non-housing Expenses $_____________________

 

ESTIMATE MONTHLY HOUSING EXPENSES

Proposed mortgage payment $_____________________
Allowance for property taxes  $_____________________

Allowance for utilities (heat, water, phone, electricity) 

$_____________________
Allowance for maintenance, furnishings $_____________________
Allowance for insurance $_____________________
Home Owner Assoc./ Co-Op dues /fees $_____________________
   
Total monthly housing expenses $_____________________

                          

STEP 3: COMPARE

Compare estimated monthly housing expenses (Step # 2) with income available  (Step # 1).

Step #1: Total Net Income       $________________

Step #2: Total Expenses         $________________

Difference (if any)                   $________________

If income available from Step 1 does not equal or exceed total expenses from Step 2, then you must re-evaluate your budget and resources.

 

What Can You Afford for your Mortgage?

    Make sure you, make the decision.

       Not the, Financial Institute, Realtor or Builder!!

 

The following chart shows a standard debt to income ratio used by many Finance institutes. I personally wouldn’t budget this high for your payment. Thirty years ago, we would only figure One week gross pay for one income, Not two incomes. If we would of used this formula for the last 25 years the Builders and Financial Institutes would have to be more competitive and home owner would not be exposed ,like the last four or five years.

$ 50,000 income per year would be a monthly payment of no more than $ 962.00 per mo.

 

The following chart shows your maximum monthly payment and maximum allowable debt load based on your gross annual income (remember, gross income is pretax income):

Debt-to-income ratio examples

Gross income

28% of monthly

36% of monthly

$20,000

$467

$600

$30,000

$700

$900

$40,000

$933

$1,200

$50,000

$1,167

$1,500

$60,000

$1,400

$1,800

$80,000

$1,867

$2,400

$100,000

$2,333

$3,000

$150,000

$3,500

$4,500

 

Here's a look at typical debt ratio requirements by loan type:

Conventional loans:
Housing costs: 26 percent to 28 percent of monthly gross income.
Housing plus debt costs: 33 percent to 36 percent of monthly gross income.

FHA loans:
Housing costs: 29 percent of monthly gross income.
Housing plus debt costs: 41 percent of monthly gross income.

Taxes and insurance  In addition, lenders include the cost of taxes and insurance when calculating how much house you can afford:

Real estate taxes: Because property taxes are part of your monthly mortgage payment, it is important to get an estimate of what yours would be. Ask your real estate agent or tax office for the rates that apply in the area you want to buy.

Homeowners insurance: You must insure your property to obtain a mortgage. You can get an estimate of insurance costs from an insurance agent or insurance company. Be sure to inquire about special requirements for hazard insurance, such as mandatory coverage for floods, earthquakes or wind (in coastal areas). If you put down less than 20 percent of your home's value, you also will have to obtain mortgage insurance or take out a second loan, called a piggyback loan, to bring the first mortgage down to 80 percent of the purchase price. Both alternatives will raise your monthly payment.


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