Method 1 Determine Your Maximum Monthly Mortgage Payment Using the Ability to Pay, PITI Ratio. a. Monthly income (annual income divided by 12) $3,750 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 = $1,050 c. Less: Estimated monthly real estate tax and insurance payments-$200 d. Equals: Your maximum monthly mortgage payment using the 28% of PITI ratio = $850 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) = 73.38 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 = $115,835 Method 2 Determine Your Maximum Monthly Mortgage Payment Using the
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