4 Variables to Add When Using a Mortgage Calculator in Texas

Buying a home is a dream that you may have dreamt for a long time. Now, it is the time to fulfill it. Apply for a home loan to a mortgage lender and go a step closer to your dream. But before you do so, would not you like to know about how much home you can qualify for. Well, a mortgage calculator can help you to get the answer.

You need to use some variables when using a mortgage calculator Texas. Do you know what these are? Here are these –

  • Home price

It depends on your income, monthly debt payment, down payment amount and your credit score. A general role you may hear when buying a home is the 36% rule. It states that you should aim for a debt-to-income (DTI) ratio of roughly 36% or less than that when applying for a mortgage loan. The higher the ratio the less likely you can afford the mortgage. To calculate your DTI, include all your monthly debt payments, including student loans, credit card debt, auto loans, projected mortgage payments, etc. And then divide the sum by your gross monthly income. In order to get a percentage, multiple by 100. The number you get is your DTI.

  • Down payment

Generally, a 20% down payment is what most mortgage lenders expect for a conventional loan with no private mortgage insurance (PMI). But there are exceptions. For instance, FHA loans often allow as low as 3.5% down payment while VA loans don’t require down payments. Moreover, some lenders have programs offering mortgages with down payments as low as 3.5% to 5%. If you follow the rule of thumb, most homebuyers should aim to have 20% of their desired home price saved before applying for a mortgage.

  • Loan term

It is another crucial variable. In the drop-down area of the calculator, you have the option of selecting a 30-year fixed-rate mortgage and a 15-year fixed-rate mortgage. These are fixed-rate loans. It means your interest rate and monthly payments stay the same over the course of the entire loan. Besides, there is an ARM or adjustable-rate mortgage, where the interest rate will change after an initial fixed-rate period. Most people choose a 30-year fixed mortgage loan, but if you are planning in another way, you can opt for other options too.

  • Mortgage rate

Mortgage rate or the rate of interest that you pay over the life of the loan is another variable that you have to enter into the online mortgage calculator when you use it. This rate varies based on your credit score and the down payment that you come with. The better your credit score that a lower your mortgage rate would be. Additionally, the higher the down payment amount, the lower the mortgage rate you need to pay for your home loan. If you don’t have an idea of what you’d qualify for, you can always put an estimated rate by using the current rate trends found online.

So, use these variables when using a mortgage calculator online and know how much home you can afford.

Author Bio: Joan Gallardo, a Senior Loan Officer, with 20+ years of experience, here writes on 2 questions to ask the best mortgage lender in Houston when you are about to choose one of the first time home buyer programs in Houston.