Mortgage Calculator: Getting a Mortgage Application Approved
A mortgage calculator is a great tool that helps future homeowners determine how much home they can afford. It allows for the input of several components such as price, down payment amount and interest rate. Once you settle on the terms you believe you can cover, you are just getting started. Next, there are steps to take to ensure the mortgage application receives approval.
The Mortgage Calculator as a Starting Point
Finding the home of your dreams is a feat worth conquering. Figuring out if you can finance it is another. The mortgage calculator allows you to see how your potential monthly payment changes. The changes are based on hypothetical interest rates and down payment amounts. It also takes into account the loan period. Some applicants opt for the 15-year fixed loan. Others pick the 30-year home loan. Thus, the calculator offers a starting point. It is a worthwhile tool that paints a realistic picture.
Some individuals qualify for an amount greater than needed to fund their home purchase. This is an additional decision that you as the applicant must make. Do you take it all? Or do you play it safe?
Reasons Why A Mortgage Application Gets Declined
Procuring a mortgage is an involved process, so it is important to prepare before submitting the application. In addition to gathering all the necessary documents, an applicant must assess their current financial state. Common reasons why an application gets denied includes too small down payment, employment history and too much debt. Additionally, if the property has issues, a lender is less likely to fund the loan.
An applicant who has a sparse employment history may be asked to provide a larger down payment up front. The lender is simply trying to ensure all parties are successful at the end of the process. If the applicant already has debt, the lender wants to ensure all payments are made on time. Past payment history plays a role as well. A home is a large investment, which is why the application process is so thorough.
There are ways to overcome any challenges that the application process uncovers. Professionals like ourselves can guide you through them.
A Mortgage Calculator Example
Our proprietary technology enhances the mortgage calculator, which is more helpful for the applicant. It takes into account the loan details, your annual net income and monthly expenses. You can also input if any joint applicants and dependents exist. The output is an estimated monthly payment. Then, you can see how much can be borrowed based on the parameters entered into the equation.
A household of five that nets $100,000 in annual income may be able to borrow $230,000. This is based on monthly expenses of $7,000. The loan terms are 30 years with an interest rate of 4%.
Mortgage Calculator Conclusion
A mortgage calculator is a useful tool for those interested in purchasing a home. It is a starting point. Our Mortgage House calculator is available to you in addition to our guidance.