Renting vs Buying properties in NYC

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    JMedrano
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    The Real Estate Market is getting low. Buying residential property is the best option now that the price are very low and the rent are higher than ever.
    questions about qualification.

    What do I need to qualify for a house?

    Do I need excellent credit?
    No. the majority of banks work with a credit score of 640 but FHA loan has minimum score require of 580

    What is the require income?
    It depend of the price of the property you are applying to buy
    Loan lenders calculate the income like this:
    credit history, your monthly gross income and how much cash you’ll be able to accumulate for a down payment To know that, you need to understand a concept called “debt-to-income ratios.”Debt-to-income ratios
    The standard debt-to-income ratios are the housing expense ratio and the total debt-to-income ratio. These are also known as the front-end and back-end ratios, respectively.

    Front-end ratio: The housing expense, or front-end, ratio shows how much of your gross (pretax) monthly income would go toward the mortgage payment. As a general guideline, your monthly mortgage payment, including principal, interest, real estate taxes and homeowners insurance, should not exceed 28 percent of your gross monthly income. To calculate your housing expense ratio, multiply your annual salary by 0.28, then divide by 12 (months). The answer is your maximum housing expense ratio.

    Front-end ratio
    Maximum housing expense ratio = annual salary x 0.28 / 12 (months)

    Back-end ratio: The total debt-to-income, or back-end, ratio, shows how much of your gross income would go toward all of your debt obligations, including mortgage, car loans, child support and alimony, credit card bills, student loans and condominium fees. In general, your total monthly debt obligation should not exceed 36 percent of your gross income. To calculate your debt-to-income ratio, multiply your annual salary by 0.36, then divide by 12 (months). The answer is your maximum allowable debt-to-income ratio.

    Example
    Take a home buyer who makes $40,000 a year. The maximum amount for monthly mortgage-related payments at 28 percent of gross income is $933. ($40,000 times 0.28 equals $11,200, and $11,200 divided by 12 months equals $933.33.)

    Furthermore, the lender says the total debt payments each month should not exceed 36 percent, which comes to $1,200. ($40,000 times 0.36 equals $14,400, and $14,400 divided by 12 months equals $1,200.

    If the monthly mortgage payment is higher than $1200 then this buyer have to get a cosigner with the same or higher income.

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