Pre Approved Mortgage Calculator, Use It Early, Use It Often

Pre Approved Mortgage Calculator, Use It Early, Use It Often

Save Thousands by Using a Pre Approved Mortgage Calculator Before You Buy or Sell a Home

A pre approved mortgage calculator is one of the most valuable tools a home buyer can use as they shop for a home. In fact, a pre approved mortgage calculator should be the first tool you use before you even start looking at homes.

Truly understanding how much a $500,000 (or $250,000 or $750,000, or whatever price range you are considering) home will cost each month will help to clarify your future obligations.

I met with a client a few weeks ago who were considering selling their existing home that is worth approximately $550,000. Their payments were a little high (approximately $2,800 per month) and they wanted to increase their cash flow and thought that if they sold their existing home and purchased a slightly less expensive home they could accomplish this. If they sold their home, after real estate fees, closing costs and paying off some credit card debts, etc. they would have approximately $25,000 remaining. These clients could then use the $25,000 toward the purchase of a less expensive home.

Try our Mortgage Pre-Approval Calculator today and find out how much mortgage you qualify for.

The home that they wanted to buy was listed for $475,000. They were told that the mortgage payments would be around $1,500 for this new home. Before they listed their home for sale, they used the pre approved mortgage calculator to check the payments and work out their budget.

By using the pre approved mortgage calculator they realized that the mortgage payments for a purchase price of $475,000 with 5% down and using an interest rate of 3.09% amortized over 25 years worked out to be $2,216 per month. Wow, this was $700 per month more than they expected. In addition to the principle and interest payments the property taxes for this home were just under $200 per month. Therefore, total principle & interest plus property tax payments worked out to be over $2,400 per month.

If they had 20% down ($95,000) instead of 5% ($23,750) the payment worked out to be $1,477 per month using the same interest rate of 3.09% but an amortization of 35 years instead of 25 years. The total payments in this case would be $1,477 plus $200 property taxes or $1,677 per month.

20% down means that the mortgage can be conventional and there are a number of lenders that will allow an amortization up to 35 years when the mortgage is conventional. The maximum amortization for a high ratio mortgage, that is, a mortgage where there is less than 20% down is only 25 years.

Because these client’s used the pre approved mortgage calculator they realized that it might be better to just stay in their current home. They could then avoid the realtor fees and closing costs that would total almost $22,000.

In fact, we reviewed their existing situation to see if something could be done to reduce their existing monthly mortgage payments. Their mortgage was maturing in less than 1 year. The interest rate that they were currently paying is 2.5% higher than the interest rates that are available today. These clients could renew their mortgage early and reduce their monthly payments by almost $800 per month.

They decided to stay in the home that they were living in, early renew their mortgage to a payment that was much more affordable. They saved almost $22,000 in real estate fees and $4,000 of interest costs by renewing early. Total savings of $26,059.

Do you want to learn more of the technical details about how the mortgage pre approval calculator works? Visit our pre approval mortgage calculator where we describe the 5 Easy Steps You Can Follow to Calculate How Much Mortgage You Can Afford.

Do you own an iPhone? If so, try the iMortgage Calculator. It’s one of the best iPhone app calculators on the market today.

Avoid the Pain and Embarrassment When You Are Told by the Bank that You Don’t Qualify for This Mortgage

Try our Mortgage Pre-Approval Calculator today and find out how much mortgage you qualify for.

It is not a fun and enjoyable experience to go into a bank, credit union or trust company to hear from the person sitting across the desk from you say “I’m sorry, you just don’t qualify for this mortgage.” Personally, I can’t think of too many situations that are worse.

I met a client who had heard these very words just 2 hours earlier. He had just come from his bank and thought that he had wasted a month of his time and his realtor’s time shopping for his first home. Let’s go back in time a little to see what happened to Grant.

Grant had been working for a company for 2 years and in June he received his first bonus. After taxes this gave him enough for a down payment of 5% on his first home. He went online to calculate how much he thought that he could afford. He pays $1,800 per month rent and thought that he could make the same mortgage payment. This worked out to be a mortgage of approximately $375,000.

He called a bunch of realtors, started going to open houses in the community that he liked and found a home listed for $400,000. He wrote up an offer that was accepted at $395,000. With his down payment of $20,000, he was going to be a home owner. Grant was really excited.

He booked an appointment with his bank, completed an application and gave them all the paperwork that they asked for. After almost a week, the bank rep asked him to come into the office. The bank rep had bad news. Grant didn’t qualify to purchase the home. The bank rep wanted to give Grant all his paperwork back.

Wow, Grant didn’t know what to do… He called his realtor to explain what happened. Grant’s realtor then referred Grant to us.

We met with Grant, completed an application and reviewed all his documents. Grant had excellent credit, but he had some credit cards with balances and a car loan with under 1 year remaining. With all the debt that he had, his minimum payments were over $1,200 per month. If Grant didn’t have this debt or if he could just reduce the debt a little, but paying off the car loan he would qualify for the home he wrote the offer on.

When we reviewed Grant’s application, we noticed that he had saved $10,000 in RRSP’s. We had a solution. If Grant withdrew the RRSP’s he could pay off the car loan and most of his other debts. He would then qualify for the home he had written the purchase agreement for.

As a first time home buyer, Grant is able to withdraw up to $25,000 from his RRSP that can be used toward the purchase of a home. The money doesn’t have to be used for the down payment, but can be used for anything related to the purchase of his home. In this case, paying off the debts will help him facilitate the purchase and qualify for the mortgage!

We also noticed that his bank wasn’t offering Grant the best mortgage rate available. We helped him secure a mortgage with another lender who offered Grant a much better rate. He was able to pay off much of his existing debt with his RRSP savings. Grant is now a proud home owner and his total monthly payments including his credit card and loan payments today is less than his total payments were when he was renting. Grant was ecstatic when he received the approval from our lender.

If Grant had used our Pre-Approved Mortgage Calculator, he would have realized that some of the debt that he was carrying was affecting the total amount of mortgage that he qualified. A consultation with us in conjunction with using the mortgage pre-approval calculator helped him understand some strategies he could take advantage of to reduce his other debt payments and purchase the home he really wanted.

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