Housing_F09_.key - Housing Making an informed decision....

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Housing Making an informed decision. How much house can I afford? How much are lenders willing to lend? Typical First Time Home Buyer: Age: 32 years old Annual income: $54,800. Cost of home: $136,000. Nat'l. Assn. of Realtors **First time home buyer tax credit • Up to $8000 tax credit (or 10%) • Income phase-outs • Reimbursable tax credit • Form 5405 • January 1, 09 - April 30, 2010 Housing terms: • Mortgage • Escrow • Lien • Amortize Lender formulas 1. How much can I afford? Annual salary x 2.5 = Cost of house Cost of house / 2.5 = Annual Salary needed
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Lender formula Will I qualify for a loan? 2. Front end ratio: Monthly gross salary x .28 = Expenditures for housing; principal interest taxes insurance Lender formula 3. Back end ratio: Monthly gross salary x .36 = Expenditures for housing, auto and credit payments $236,000 1. What salary? 2. Front end ratio? 2. Back end ratio?
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This note was uploaded on 11/11/2011 for the course FCE 238 taught by Professor Boyce during the Fall '07 term at Michigan State University.

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Housing_F09_.key - Housing Making an informed decision....

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