When a lender evaluates your mortgage application a big factor they consider is your estimated future housing expense. This housing expense is broken down into the following areas: your first mortgage loan
your second mortgage loan (if any)
hazard insurance
mortgage insurance
property taxes
home ownership association dues
miscellaneous expenses First mortgage loan This is the projected monthly expense of your first mortgage on the property. The lender often uses a "qualifying rate" which is an interest rate they use in their calculations to see if you qualify for the size payment you are looking for. Second mortgage loan This is the monthly payment on your second loan, if you will have one. Hazard insurance This is the monthly payment for the hazard insurance policy on the property. This policy covers the policy holder in the event the property is destroyed or damaged. Mortgage insurance This is an insurance payment required by some lenders when the loan amount is very high as a percentage of the property's value. When a buyer puts down no or a small down payment the lender may charge this additional amount to offset their risk. Property taxes This is the monthly expense of the property's annual property tax burden. Home ownership association dues These are the monthly dues for the home ownership association, if there is one. These dues can be for property maintenance such as lawn mowing and grounds keeping. Miscellaneous expenses These are any other housing related expenses. |
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