Lease versus Purchase Decision Cost of Purchasing
| W | 11 | WORKSHEET | Worksheet for Calculating the Maximum Monthly Mortgage Payment and Mortgage Size for Which You Can Qualify | ||||||
| Method 1 Determine Your Maximum Monthly Mortgage Payment Using the | |||||||||
| Ability to Pay, PITI Ratio. | |||||||||
| a. | Monthly income (annual income divided by 12) | ||||||||
| b. | Times 0.28: Percentage of PITI (Principal, interest, taxes, and insurance) to your | ||||||||
| monthly gross income that lenders will lend in the form of a mortgage loan | |||||||||
| (multiply line a by 0.28) | x 0.28 | = | $0 | ||||||
| c. | Less: Estimated monthly real estate tax and insurance payments | – | |||||||
| d. | Equals: Your maximum monthly mortgage payment using the 28% of PITI ratio | = | $0 | ||||||
| To Determine the Maximum Mortgage Loan Level Using the Maximum Monthly | |||||||||
| Mortgage Payments as Determined Using the PITI Ratio (line d): | |||||||||
| Step 1: Monthly mortgage payment for a $10,000 mortgage with a ____ year | |||||||||
| maturity and a ____% interest rate (using Table 8.1) | = | ||||||||
| Step 2: Maximum mortgage level = maximum monthly mortgage payment (line d) | |||||||||
| divided by the monthly mortgage payment on a $10,000, ____%, ____year | |||||||||
| mortgage (step 1 above) times $10,000 = (line d/step 1) x $10,000 | = | ||||||||
| Method 2 Determine Your Maximum Monthly Mortgage Payment Using the | |||||||||
| Ability to Pay, PITI Plus oth Fixed Monthly Payments, Ratio. | |||||||||
| e. | Monthly income (annual income divided by 12) | ||||||||
| f. | Times 0.36: Percentage of PITI + current monthly fixed payments to your | ||||||||
| monthly gross income that lenders will lend in the form of a mortgage loan | |||||||||
| (multiply line a by 0.36) | x 0.36 | = | $0 | ||||||
| g. | Less: Current nonmortgage debt payments on debt that will take over | ||||||||
| 10 months to pay off and other monhtly legal obligations such as child support | |||||||||
| and allimony payments | – | ||||||||
| h. | Less: Estimated monthly real estate tax and insurance payments | – | |||||||
| i. | Equals: Your maximum monthly mortgage payment using the 36% of PITI + other fixed | ||||||||
| Monthly payments ratio (line f – g – h) | = | $0 | |||||||
| To Determine the Maximum Mortgage Loan Using the PITI Plus Other Fixed Monthly | |||||||||
| Payments Ratio (line i): | |||||||||
| Step 1: Monthly mortgage payment for a $10,000 mortgage with a ____ year | |||||||||
| maturity and a ____% interest rate (using Table 8.1) | = | ||||||||
| Step 2: Maximum mortgage level = maximum monthly mortgage payment (line d) | |||||||||
| divided by the monthly mortgage payment on a $10,000, ____%, ____year | |||||||||
| mortgage (step 1 above) times $10,000 = (line i/step 1) x $10,000 | = | ||||||||
| Method 3 Determine Your Maximum Mortgage Level Using the “80% of the | |||||||||
| Appraised Value of the House” Rule. | |||||||||
| j. | Funds availble for the down payment and closing costs | ||||||||
| k. | Less: Closing costs | – | |||||||
| l. | Equals: Funds available for the down payment | = | $0 | ||||||
| m. | Times 4: Maximum mortgage level using the “80% of the appraised value of the | ||||||||
| house” rule (the 20% down, line l, times 4 equals the 80% you can borrow) | x 4 | = | $0 | ||||||
| Conclusion: Maximum Mortgage Level for Which You Will Qualify | |||||||||
| (the lowest of the amounts using method 1, method 2, or method 3) | = | ||||||||
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