AFFORDABILITY 101

Affordability 101

If you earn $56,516, the average household income, you can afford $1,695 in total monthly payments, according to the 36% rule. The rule, which measures your debt relative to your income, is used by lenders to evaluate how much you can afford.

Key factors in calculating affordability are 1) your monthly income; 2) available funds to cover your down payment and closing costs; 3) your monthly expenses; 4) your credit profile.

  • Income – Money that you receive on a regular basis, such as your salary or income from investments. Your income helps establish a baseline for what you can afford to pay every month.
  • Funds available – This is the amount of cash you have available to put down and to cover closing costs. You can use your savings, investments or other sources.
  • Debt and expenses – It’s important to take into consideration other monthly obligations you may have, such as credit cards, car payments, student loans, groceries, utilities, insurance, etc.
  • Credit profile – Your credit score and the amount of debt you owe influence a lender’s view of you as a borrower. Those factors will help determine how much money you can borrow and what interest rate you’ll be charged. Check your credit score.

We’ll provide you with an appropriate price range based on your situation. Most importantly, we’ll take into account all your monthly obligations to determine if a home is comfortably within reach.

PRO TIP:
It’s also important to plan for the future. Consider creating a savings plan for upcoming life events, such as having a child.

For more information about home affordability, read about the total costs to consider when buying a home.

When banks evaluate your affordability, they only take into account your outstanding debts. They do not take into consideration if you want to set aside $250 every month for your retirement or if you’re expecting a baby and want to set aside additional funds. NerdWallet’s Affordability Calculator helps you easily understand how taking on a mortgage debt will affect your expenses and savings.

Do you know what you want for a home?

Hi {LEAD_NAME} –

One of the first logical steps in the home search process is narrowing down your true wants and needs in a home. Doing this simple exercise early in the process will help save you time and frustration during the search process.

Some major things to consider:

  • How many bedrooms/baths?
  • What neighborhood or area?
  • How close do you need/want to be to schools?
  • What is your price range?
  • How close to work?
  • How much square footage do you need?

You should also consider which features of the home might be required vs. nice to have. Things like:

  • Garage
  • Yard
  • Swimming Pool or hot tub
  • Walk-in closets
  • Fireplace

{I_AM_WE_ARE} sure you will find that spending a little time in advance thinking about these things is well worth it. {I_WE} would love to sit down with you and guide you through the exercise.

How else may {I_WE_LC} be of service in your home search? {I_WE} look forward to serving you in any way {I_WE_LC}  can. Please don’t hesitate to contact {ME_US_LC}.

Sincerely,

{AGENT_NAME}

{AGENT_NAME}, {AGENT_DESIGNATION}{AGENT_EMAIL}

{AGENT_PHONE}

{AGENT_WEBSITE_LINK}

{AGENT_BRE}