Learning in Action:
Crunch the Numbers

The Home Mortgage Qualifying Chart
And the formulas...

Plug the following numbers into your Home Mortgage Qualifying Chart for our hypothetical borrower, Credit & Personality Type #4. She is a single borrower with a gross annual salary of $28,500 and home purchase price of $60,000. Answers will appear later in answer key.

What Do these Numbers Mean for You?

The chart shows you how much you can qualify for.

Plug your own numbers into the chart to see how much you can qualify for. Remember that it's not the end of the road if you fall outside the percentages by a few points. The guidelines are just those-guidelines. Use this chart as a tool to calculate approximately what you can afford. Lenders will treat the guidelines flexibly.

What Are the Pitfalls to Buying?

1. There is always a risk involved when you purchase a new home. You have to qualify for the loan, then keep up payments despite higher rates, more household expenses, moving costs, etc. Be sure you are ready to make that commitment and that you are covered financially.

2. You have to clean up your credit. Pay off those debts and save some money for a down payment and closing costs.

3. If you aren't a first-time homebuyer, you may be looking at a higher down payment. First-timers often get a break with low down payment requirements. Be sure you have enough saved if this isn't your first home.

4. Once you buy a new home, you are locked in again for a few years. You can't pick up as easily and move without losing financially. Be prepared to stick it out in the new location.

5. You have to qualify for the loan and go through the lender's tests. There is always a risk of having to wait until you can meet the guidelines required for your new loan amount.

That's It...The Self Assessment Section

Are you ready for a pop quiz? Click on the icon below to test what you have learned. Be sure to review the sections of the course related to your WRONG answers!

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