Why Use A Mortgage Refinance Calculator
Refinancing your mortgage can be a really valuable option as a homeowner. However, there are costs associated with refinancing, which can outweight any potential savings you might make. As a result, it’s important to understand how much a mortgage refinance will cost you before you pull the trigger – that’s where a mortgage refinance calculator comes in handy.
The mortgage refinance calculator above will do the hard work for you, estimating the penalties associated with refinancing, as well as the potential savings you’ll make from getting a new mortgage at today’s rates. While there are some non-financial reason you might want to refinance your mortgage, our calculator gives you the information you need to start making a decision.
How Much Do I Need To Earn To Get A Mortgage Of 300000
As mentioned before, every case is looked at on an individual basis. Mortgage lenders will look at your annual income and whether you are employed or self-employed. The lender will want to know such things as if you have any dependents. They will also review your debt such as credit card or loans and credit score.
To give you a very rough idea of someone looking for a £300,000 mortgage with a 25-year mortgage term: A couple looking to buy a home with a £300,000 mortgage would need to earn at least £70,000 a year between both of them. They would need to have no loans or debts otherwise this would reduce the amount they can borrow. Every lender uses a different mortgage calculator to work out how much you can borrow. This will vary so make sure you speak to a mortgage adviser who will be able to advise you and answer the question how much can I borrow on a mortgage for my new home?.
How The Loan You Choose Can Affect Affordability
The loan you choose can also affect how much home you can afford:
- FHA loan. Youll have the added expense of up-front mortgage insurance and monthly mortgage insurance premiums.
- VA loan. You wont have to put anything down and you wont have to pay for mortgage insurance, but you will have to pay a funding fee.
- Conventional loan. If you put down less than 20%, private mortgage insurance will take up part of your monthly budget.
- USDA loan. Both the upfront fee and the annual fee will detract from how much home you can afford.
How Much Do I Need To Earn For A 100000 250000 Or 500000 Mortgage
Our calculator shows that for a £100,000 mortgage you will need to earn at least £22,500 as a single applicant or between you if youre applying for a joint mortgage. Bear in mind that a £100,000 mortgage can result in different LTVs and therefore different rates, depending on the amount of deposit you have and the overall value of the property.
For a £250,000 mortgage you will need to earn at least £56,000 as a single applicant or between you if applying as a couple, while for a £500,000 mortgage you will need a earn at least £111,500 as a single applicant or as joint income for a shared mortgage.
Required Income Calculator For A Home Purchase Or A Refinance
Have you found a home that you want to buy? Or plan on refinancing? Or you’re looking at homes around a certain price point. Can you get a loan to buy it? Need to see how much you can qualify for on a refinance?
This mortgage income calculator can give you the answer. This calculator not only takes into account the loan amount and interest rate, but also looks at a whole range of other factors that affect the affordability of a home and your ability to get a mortgage, including your other debts and liabilities that have to be paid each month, as well as costs like taxes and homeowner’s insurance that are part of the monthly mortgage payment.
It also makes it easy to see how changes in the mortgage rate or the loan amount affect the income required for a loan, by using the sliding adjusters below to change your results. Just start filling out the fields indicated below. Or scroll down the page for a detailed explanation of how to use the Mortgage Required Income Calculator.
- FAQ: Great tool to use as loan amount estimates change as you shop for a new home. Or for a refinance when the appraised value forces a change in loan amounts because of loan to value .
How Much Mortgage Can I Afford
Generally speaking, most prospective homeowners can afford to finance a property whose mortgage isbetween two and two-and-a-half times their annual gross income. Under this formula, a person earning $100,000 per year can only afford a mortgage of $200,000 to $250,000. However, this calculation is only a general guideline.”
Ultimately, when deciding on a property, you need to consider several additional factors. First, it’s a good idea to have some understanding of what your lender thinks you can afford . Second, you need to have some personal introspection and figure out what type of home you are willing to live in if you plan on living in the house for a long time and what other types of consumption you are ready to forgoor notto live in your home.
While real estate has traditionally been considered a safe long-term investment, recessions and other disasters can test that theoryand make would-be homeowners think twice.
How Much Will A Bank Lend On A Property
Generally, we can expect a lender to lend up to 80% of the value or price of a house .
Often, lower percentages are loaned on properties outside urban areas and on apartments. These figures are sometimes called the loan to value ratio, or LVR.
It is possible to borrow up to 95% of a propertys value in some cases. But thats a big risk for both the borrower and the lender.
You may face two extra costs when borrowing a high proportion of a propertys value:
Talking to one or more lenders or to a local mortgage broker can give a good idea of the lending limits for the types of property you want to buy and the area you want to buy in.
Figure Out How Much Mortgage You Can Afford
As a general rule, lenders want your mortgage payment to be less than 28% of your current gross income. Theyll also look at your assets and debts, your credit score and your employment history. From all of this, theyll determine how much theyre willing to lend to you.
However, the amount you may qualify to borrow isnt necessarily what you should borrow. Why? Because lenders are only looking at your past and present situation. They dont take into account your future plans.
Are you thinking of a career change? Do you expect a substantial increase in debt or expenses? Use our mortgage affordability calculator to consider multiple scenarios. Or talk with a mortgage loan officer. They can help you figure out a price range that makes sense for the long term.
Its Not What You Can Borrow Its What You Can Afford
In some respects, the mortgage lending industry is working against your best interest. If you are deemed a qualified borrower, a lender is prone to approve you for the maximum it believes you can afford. But in some cases, that amount may be too generous.
Buying a home always means dealing with big numbers. And the impact to your budget may seem to be a stretch, particularly in the beginning. The challenge is buying a home that meets your current and future needs, without feeling like all of your money is in your home leaving you without the financial freedom to travel, save for other priorities and have a cash flow cushion.
Now that the NerdWallet How much can I borrow calculator has given you an idea of your buying power, you may want to gut-check the number by:
Run affordability scenarios. You can get another view of your home-buying budget by running some what-ifs through the NerdWallet home affordability calculator.
Talk to more than one lender. You are more likely to get a better interest rate by comparing terms offered by multiple lenders, and it might be illuminating to see the loan amounts different lenders will qualify you for.
Consider all homeownership expenses. Its not just whats built into your monthly payment such as insurance, taxes and the rest but the other having-a-home expenses, like structural upkeep, new furniture, maybe even yard maintenance equipment.
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How Do I Use The Maximum Mortgage Calculator +
To use our maximum mortgage calculator, all you have to do is:
- Input the interest rate you expect to pay on your mortgage.
- Select your loan term from the drop-down menu. The loan term represents the number of years itll take you to repay your mortgage.
- Input your monthly income and that of your co-borrower. That could be your spouse, next-of-kin, etc.
- Under the Monthly Liabilities section, put in any usual repayments that you have to make on a monthly basis.
- Under the Monthly Housing Expenses section, select the appropriate answers from the list provided.
Include Taxes And Insurance
Property taxes and homeowners insurance are necessary when buying a new home. You need to have home insurance with the lender named on the policy. Also, the government requires all homeowners to pay property taxes. These costs are often overlooked but should be considered before applying for a mortgage.
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Estimate How Much House You Can Afford
To help you get started, you can use our calculator on top to estimate the home price, closing costs, and monthly mortgage payments you can afford based on your annual income. For our example, lets suppose you have an annual income of $68,000. Youre looking to get a 30-year fixed-rate loan at 3.25% APR. For your down payment and closing costs, youve saved $55,000. See the results below.
- Annual income: $68,000
|Total Monthly Mortgage Payment||$1,587|
Based on the table, if you have an annual income of $68,000, you can purchase a house worth $305,193. You may qualify for a loan amount of $252,720, and your total monthly mortgage payment will be $1,587. Since your cash on hand is $55,000, thats less than 20% of the homes price. This means you have to pay for private mortgage insurance . Take note: This is just a rough estimate. The actual loan amount you may qualify for may be lower or higher, depending on your lenders evaluation.
The following table breaks down your total monthly mortgage payments:
|Monthly Payment Breakdown|
|Total Monthly Mortgage Payment||$1,587|
According to the table, your principal and interest payment is $1,099.85. When we add property taxes and home insurance, your total monthly mortgage payment will be $1,481.34. But because you must pay PMI, it adds $105.30 to your monthly payment, which results in a total of $1,587 every month.
Be Prepared For Closing Costs
A long list of small closing costs can add up quickly. But dont despair. Your mortgage loan officer can help you figure out the best way to cover these costs. You may even be able to roll them into your mortgage.
Early in the loan process, youll get an itemized list of these costs. It will include standard expenses such as appraisal fees, title fees and the first year of your home insurance premium payments. Depending on your specific loan and state requirements, there will be other costs as well.
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Dont Get Stuck On A Standard Variable Rate
A standard variable rate is when your fixed rate comes to an end. This is usually a much worse rate than your fixed rate and you should avoid slipping onto one at all costs.
Who are the FCA?
All brokers are authorised and regulated by the Financial Conduct Authority .
This is for your protection and to make sure that the service and deal you get is the right one for you.
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Most Affordable Markets For Homebuyers
According to 2020 data fromZillow Research, record low mortgage rates have helped to boost affordability for potential homeowners. The table below shows the top 10 most affordable markets to live in for December 2020 and is based on a typical home value of no more than $300,000 . The market and share of income spent on a mortgage may fluctuate based on the current mortgage rate, the typical local homeowners income and the typical local home value.
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How Much Down Payment Should You Save
Before buying a house, be sure to give yourself enough time to save for a down payment. While the amount depends on your budget, the homes price, and the type of loan you have, most financial advisers recommend saving for a 20% down payment. This is a sizeable amount, which is more expensive if your homes value is higher.
In September 2020, the median sales price for new homes sold was $326,800 based on data from the U.S. Census Bureau. If this is the value of your home, you must save a down payment worth $65,360. Paying 20% down lowers risk for lenders. Its a sign that you can consistently save funds and reliably pay back your debts.
Down Payments Vary
Down payment requirements are different per type of loan. However, many conventional mortgage lenders require at least 5% down. For government-backed loans such as an FHA loan, a borrower with a credit score of 580 can make a down payment as low as 3.5% on their loan. Take note: A smaller down payment subjects you to a higher interest rate.
Nonetheless, its still worth making a larger down payment on your mortgage. Heres why paying 20% down is more beneficial for homebuyers.
How Are Mortgage Repayments Calculated
To calculate a mortgages monthly repayment, youll need to know the value of the home youre buying, your deposit, the interest rate and the length of term.
- Deposit – £50,000
- Mortgage amount – £200,000
- Mortgage term 30 years
- Mortgage rate 2%
If the mortgage rate in this example was fixed for the length of the 30-year term, youd pay 360 monthly instalments of £739.24. This pays off the £200,000 loan in full, along with a total interest amount of £66,126.
Its important to remember that, as you begin to pay off your mortgage, the interest owed begins to fall in line with the outstanding amount on your mortgage thats owed. This means youll slowly be charged less in interest as the years go on. During a fixed term however, youll be charged a fixed, regular amount.
|Year of mortgage|
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Cost Of Mortgage Loan Insurance
The fee you pay for mortgage loan insurance is called a premium. Mortgage loan insurance premiums range from 0.6% to 4.50% of the amount of your mortgage. Your premium depends on the amount of your down payment. The bigger your down payment, the less you pay in mortgage loan insurance premiums.
Find premiums based on the amount of your mortgage:
You can pay your premium by adding it to your mortgage or with a lump sum up front. If you add your premium to your mortgage, you pay interest on your premium. The interest rate is the same rate as youre paying for your mortgage.
Ontario, Manitoba and Quebec apply provincial sales tax to mortgage loan insurance premiums. Your lender cant add the provincial tax on premiums to your mortgage. You must pay this tax when you get your mortgage.
Loan To Value And The Size Of Your Deposit
All mortgages require some form of deposit, but they are not directly linked to how much you could borrow. The loan to value or LTV of your mortgage, means how much the mortgage is in relation to the value of the property. So, if you have a £50,000 deposit for a £200,000 property, the mortgage you need would be £150,000 75% of the property’s worth, or 75% loan-to-value.
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