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4 expert tips for getting the most out of online mortgage calculators

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Even casual home shoppers have likely come across an online mortgage calculator, which is perhaps the most misunderstood financial tool on the internet.

Based on cursory financial information inputted by the user, a mortgage calculator reveals approximately how much house that person can afford. Or, more specifically, how much money the user could reasonably borrow from a lender in order to purchase a home, complete with an estimate of the monthly mortgage payment.

And while the process may seem straightforward, it is often at this first (and crucial) step that first-time homebuyers will make a mistake.

Livabl recently sat down with Zack Tolmie, a home lending officer with Citibank, and Jodi Carter, a Certified Public Accountant working in New York City, to discuss how homebuyers can best use the data from an online mortgage calculator.

1. Find an interpreter

Numbers don’t lie, but they don’t necessarily tell the whole story, either.

“An online mortgage calculator may tell you that you can technically afford to buy a house valued at $300,000, but in reality, based on your larger financial picture, including debts and long-term financial goals, you really shouldn’t be buying anything over $250,000,” says Tolmie.

The estimate typically does not include other potential monthly and yearly costs associated with homeownership, like cable, internet, pool cleaning and landscaping. According to the listing site Zillow, these “hidden” costs can easily add up to almost $10,000 annually for the average homeowner.

A mortgage calculator gives a broad overview, at best, of how much house you can afford based on your data, but it often doesn’t consider some important variables that can drastically reduce your estimate.

“They don’t take into consideration the portion of the monthly payment for escrow, which may include property taxes and various forms of required insurance,” says Carter.

The temptation for some buyers is to bite off more home than they can realistically chew.

“The most common and damaging mistake that prospective homebuyers make is choosing a monthly commitment that is the highest amount they believe that they can afford. They don’t leave room for ongoing savings and they find themselves working just to pay the mortgage,” adds Carter.

2. Leave no room for error

One of the caveats of a mortgage calculator is that it is performing calculations based on user-provided data, which could be inaccurate or outdated.

For example, a shopper may think that they have a “good” credit score — which ranges from about 670 to 740 — when in actuality, their score hovers in the low-600s and technically “needs work.” The difference in credit score can drastically alter how much a shopper will get approved to borrow, which directly impacts their monthly mortgage payment.

According to the mortgage calculator on NerdWallet, a buyer in Atlanta, GA with “poor” credit and an annual salary of $90,000 may only get approved for a loan of about $386,000, compared to $417,000 for a buyer with a good credit score.

Free online tools like Credit Karma allow shoppers to see the same financial information as lenders.

“A lot of shoppers are unaware of mistakes on their credit report, and mistakes can cost thousands of dollars and time. Often, buyers will find mistakes when they make an offer, and then it’s too late to do anything to fix it,” says Tolmie.

Tolmie recommends having a financial expert review your credit report a year ahead of when you plan to buy.

“An expert can give you very specific details on how to improve your credit score, like just making all of your payments on time for twelve consecutive months. On-time payments are the biggest impact on a credit score,” says Tolmie

3. Manage your debts

According to a recent study, approximately 80 percent of adult Americans (across all generations) carry some amount of debt — whether it be student loans (Millennials) or credit card debt (Gen X and Baby Boomers).

Understanding the role debt plays in homebuying and actually knowing how much debt you carry can save you from a lot of headaches and heartaches down the line.

“The fact that you have debt doesn’t hurt your ability to get a mortgage, but what lenders are really focused on is how much your monthly payment on that debt is. We want to make certain you can afford that monthly payment as well as your monthly housing debts with your current income,” says Tolmie.

Mortgage calculator estimates rely on the accuracy of the user’s data. In reality, a shopper may have a monthly debt payment over $1,000 and mistakenly downgrade that payment. Or worse yet, fail to include an estimate for future payments because they don’t know how much they will amount to.

“With student loans especially, a bank will estimate conservatively, which could curtail your borrowing power,” says Tolmie.

4. Prepare a trial run

If the estimated payment feels too high to comfortably afford, it probably is. To find out how much of a monthly payment you can truly afford, start an aggressive savings plan.

“When preparing to buy a home, take the desired down payment amount and divide it by the expected monthly cost of your new home. That calculation will give you the number of months that you will need to save for the down payment,” says Carter.

Carter advises her clients to faithfully set aside money into a savings account for that duration.

In the end, this not only proves that you have the cash for the down payment, but that you can afford the monthly payments without struggle.

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5 DIY Home Improvements for the COVID-19 Lockdown

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The global coronavirus pandemic has forced millions of people around the world, to spend more time in their homes this year than they have spent in a long time. As people sit around day after day within the confines of their home, it becomes easier to notice all the areas of the house that need some work. Fortunately, everyone can now afford the extra free time to do the home renovation project they’ve been putting off for years.

Due to the on-going global health crisis, you may not be able to hire any help for your home improvement project; this means that whatever new project you plan to do around the house, whether it’s repainting the home, or installing floor heating systems, you would have to do it yourself.

Here are some do-it-yourself that you may like to try out.

Upgrade to Smart Home Appliances

It’s 2020, what better year to embrace the future by installing a range of high-tech devices that make life extra easy. For instance, with a smart thermostat, your home’s heating and cooling system can go off on their own when not needed, keeping your electricity bills lower. Other appliances that you can make smart include your lighting, home security, music and more.

Clean out your Garage

Homeserve suggests a garage cleanout as a great home improvement project for this season because cleaning out your garage provides some fresh air, the heavy lifting provides some workout and you feel an enormous sense of accomplishment when it’s done.  What’s more, the day would be far spent by the time you’re done with this project. Cleaning out your garage would require you to sweep out any dirt or debris, and get rid of other useless items that may have been stored there for a long time.

Start a Repainting Project

There’s always room for a fresh coat of paint to make everywhere look more alive, so grab a paintbrush and add some extra character to your home. The good news is that you don’t even have to go out for the paint, you can have it shipped directly to your door. Southlandremodeling suggests that if you had 2019 palette or older in your home, now is the time to embrace the latest colour hues of 2020, that show off a more contemporary style and make your home look more sophisticated.

 Build a Patio

Now is the time where every family would enjoy having a paver patio or an outdoor deck, somewhere to sit and get some fresh air when you’re tired of being cooped up inside all day. First you have to ensure that your home has enough space for a patio and that you have enough skills to handle a hammer and other tools for simple construction.

Next you order your needed materials online and get started. There is a great sense of satisfaction that comes with being able to create an outdoor space that your family can enjoy while being stuck at home.

Install some floor heating systems

Installation of floor heating systems is one of the best home improvement projects that one can get. Many people prefer to hire professionals to do these kinds of installation but if you are up for it, it’s not impossible to do this on a DIY project and get a valuable addition to your home for about half the cost.

Finally

There is no reason to continue holding out on your dream DIY home renovation projects, especially now that you have all the time in the world due to the COVID-19 stay-at-home order. Now is the perfect time to transform your home all by yourself!

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13 Montreal Apartments For Rent That Have Breathtaking Outdoor Spaces

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With Quebec’s moving day just around the corner, many people are starting to look for a new property to rent. And, now that Montreal real estate activity is back in action, you can start trying to find the perfect space again. And, if you ask me, an apartment that comes with outdoor space is a must when living in the city.

From balconies to shared rooftop spaces, we’re all looking for a place where we can be outdoors. 

Now, more than ever, fresh air is something that we’re all craving. And, with summer coming faster than we think, finding a place with access to the outside is on so many of our checklists. 

Luckily for you, we at MTL Blog have made your job very easy and have gone through listings throughout the city to showcase some of the best rentals, all of which have outdoor spaces. 

Some of these properties offer private balconies while others have surreal rooftops you get access to. Regardless of which one you fall in love with, you’ll be sure to have a summer to remember living in any apartment on this list. 

Get ready for moving day because after looking at these properties, you’re going to be ready to pack your belongings.

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Montreal real-estate market hit hard by pandemic

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Like many industries affected by the COVID-19 pandemic, the red-hot Montreal real-estate market has suddenly chilled.

After 61 consecutive months of increases, the Montreal Census Metropolitan Area reported a 68-per-cent decrease in residential sales transactions in April 2020 compared with the year-earlier period, according to the Quebec Professional Association of Real Estate Brokers.

The most recent residential real-estate market statistics for the Montreal area showed 1,890 residential sales transactions were concluded last month. Those figures are based on the real-estate brokers’ Centris provincial database.

Montreal has been hit harder than other Canadian cities by the pandemic, and the drop in sales was seen in all six main areas of the Montreal CMA.

The drop in sales applied to all three property categories. Single-family home sales fell 68 per cent (1,048 transactions): plex sales dropped 67 per cent (161 transactions); and condominium sales tumbled 69 per cent (675 transactions).

Despite the drop in sales, real-estate prices rose in the CMA. The median price of single-family homes increased by nine per cent to reach $360,000, while the median price of condominiums climbed 12 per cent to $289,900.

Compared with April 2019, the median price of plexes (two to five dwellings) increased 10 per cent to $595,000.

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