An affordability calculator can be a complicated thing because when somebody asks a question related to the affordability, calculators available online are not very precise. So most of the homebuyers end up qualifying for much less than what their calculator has predicted.
Affordability calculators depend on stated, basic information
Typically, it isn’t the online calculator’s mistake that it is not accurate. These calculators are aimed to provide you with an estimated number, so you can have an idea about where to set the price limit when you’re completing your mortgage application. On the other hand, you’re also just providing the calculator with some of your basic information related to your income, debt, credit score and the amount of down payment; however, the exact answer really lies in the details.
You need to give lenders detailed and verifiable information for them to tell you how much house you can afford
There are a number of certain financial elements that a lender needs to consider first before they can approve your loan, most of that information can’t be entered into an online calculator easily.
For instance, lenders will require the below information:
- Current salary as well as the proof of your income for the last two years
- Your overall income along with the specific components of your income, such as commission, bonuses, etc.
- Your credit score along with the type and amount of your other loans
- The amount of your down payment along with the source of your money
- Other sensitive information such as alimony payments with their legal documentation to prove them
So why would lenders require all this information? Because today’s lenders are more risk-averse, especially after the 2008’s housing crisis. A mortgage means that you are committing yourself for years of payments, if not for decades. Although your present financial information is a start, they want to know about your future ability to pay as well. They need to know that you have a consistent earning potential, so one odd year of huge bonuses don’t count in their eyes as steady and guaranteed income. They also focus on your red flags. Lenders want to ensure that your funds for a down payment are genuinely yours and it’s not the money that you have borrowed temporarily from someone else.
If you have any irregularities or flukes in your financial profile, it doesn’t mean that you can’t secure a mortgage. Everyone has a few; however, the fact is that they will lower the amount that you can qualify for a mortgage.
Making sure that you can get and afford your dream house
If you’ll provide your lender with all the personal, detailed, and verifiable information at the start, then there is a better chance of knowing the exact amount that you can borrow. Moreover, when there is a situation where you’re competing for your dream home with other buyers, it certainly makes a difference.
Calculation of how much you’re eligible to borrow
At Texas Trust Home Loans, we are working continuously to give you that certainty with our Buyer Approval Letter.
So how does it work?
- Borrowers can submit their information (documents like pay stubs and W2s) on our website, twenty-four hours a day.
- We can provide a Buyer Approval Letter to our qualified borrowers, specifying how much home you are exactly approved to borrow.
- You’ll get a Buyer Approval Letter, and with that, your seller will know that except for any unanticipated problems like with the process of appraisal, you’re guaranteed to get a loan for the home. In competitive markets, this can make your offer really stand out.
The Buyer Approval Letter is free of cost and there are no hidden strings. When you’ve acquired your Buyer Approval Letter from Texas Trust Loans, you can work out adjustments to your down payment, borrowing, and type of mortgage (calculations that are meaningful). If you don’t want to disclose your full affordable amount to the seller, you can also get a letter on a lower maximum purchase price.
There are many affordability calculators available online that can provide you with a rough estimate about how much you can actually afford. However, if you want certainty to buy your dream home, try out a Buyer Approval Letter by spending a little extra time in submitting your accurate financial details to us. Call us at (888)-971-1425, and one of our expert loan officers will be happy to help you out with the process.