MORTGAGE PAYMENTS 2007

How Much Home Can You Afford?

The rule of thumb when you buy a home is that a family can afford a home 2½ - 3 times your annual income. To calculate how much home you can afford, multiply your gross annual salary times 2.5. That will give you the minimum amount you should be able to afford. Multiply your gross annual salary by 3 and you will find the maximum amount of home you should be able to afford. But remember you will have other payments and expenses such as a car note, gasoline, food, clothing, and others.

Personal circumstances also may change how much home you can afford. If you have good jobs and no children, you may be able to afford a more expensive home.

1) Calculate how much home you can afford:

My annual salary (if not married) ____________________________

x 2.5 = ______________________ x 3 = ______________________

Husband annual salary (if married) _____________

Plus +

Wife annual salary (if married) _____________

Equals =

Total Annual salary (if married) _____________

x 2.5 = ______________________ x 3 = ______________________

You should look for a home within those 2 price ranges.

2) You will need to print this page only showing your calculations. DO NOT CLICK PRINT!

File à Print à Pages à 1

Calculating your Monthly Mortgage Payment

Homes are paid for each month. That is called the mortgage payment. After you have found the home you want to buy, you will need to find out how much your monthly payment will be. Follow the steps below.

1. Go to http://realestate.yahoo.com/calculators/payment.html to figure your monthly mortgage amount including interest. You will fill in the amounts.

2. The price of your home will be the loan amount. You will not have a down payment.

1. You will need the interest rate. The interest rate is determined by which term you choose. The term is how long you will pay for your home. Most people pay in 15 or 30 year terms.

§ Choose a 15-year length of mortgage at 5.93% interest rate.

Or

§ Choose a 30-year length of mortgage at 6.19% interest rate.

2. Show Amortization Table?: No

3. Click on the Submit button.

4. The calculator will tell you how much your monthly payments will be.

Ø See your MONTHLY PAYMENT.

Ø This is your mortgage. Put this number in your Budget Project spreadsheet, in cell B9.

5. Print your calculation from Yahoo. Print only page 1.

File à Print à Pages à 1

6. Print the description of the home you are purchasing with the picture. Do not print in color.

7. NOW YOU MUST FIGURE YOUR TAXES AND INSURANCE. Go to the Tax Information document to calculate taxes on your home and the Insurance Information for your homeowners insurance.