HOW MUCH CAN YOU AFFORD?

In 100 Questions Every First Time Homebuyer Should Ask, nationally syndicated real estate columnist and author Llyce R. Glink provides the following easy-to-use worksheet when determining how much of a monthly loan payment your income will support.

1. Gross Monthly Income (GMI) from all sources:                                                         
2. Multiply by:

.25 (25 percent), a conservative number

.28 (28 percent), the conventional amount

.33 (33 percent), allow you some debt payment

.36 (36 percent), if you have no debt

            For the loan-to-income ration                                                                                              

3. Subtract your monthly debts service:

Credit cards

Car loan(s)/leases

Charge Accounts

School loans

Other personal debt

Total Debt Service                                                                                                                  

4. Subtract monthly or semi-monthly

Condominium or co-op Assessments,

Or homeowner association fees, if applicable                                   

5. Maximum monthly mortgage payment                                     
6. Subtract real estate property and tax monthly escrow        
7. Net monthly mortgage payment                                                 
8. Multiply by 12 (month of the year)                                                 
9. Annual mortgage payment                                                           
10. Divide by the current interest rate                                             
11. Total of mortgage                                                                            
12. Plus cash you have available for the down payment

            (save some for closing costs and two months reserve)                   

13. Approximate amount you can spend on a home                     

What will your monthly payment be?

Based on a loan of $100,000 (which can easily be multiplied to reflect your particular purchase price) with a 30-year fixed rate, the monthly payments based on various interest rates follows:

      Interest Rate    Monthly Payment  Interest Rate          Monthly Payment

      4 percent              $477.42                      5.25 percent               $552.50

      4.25 percent         $491.94                      5.5 percent                 $567.79

      4.5 percent           $506.69                      5.75 percent               $583.57

      4.75 percent         $521.65                       6 percent                    $599.55

      5 percent              $536.82                      7 percent                    $665.30

Note: This payment does not include taxes (approximately 2 percent of the purchase price in our area), insurance (depending upon location, you may be required to carry homeowner, wind and flood policies), HOA fees, and mortgage insurance for those who put down less than 20 percent.