Ask the Expert: How Much House Can I Afford? Unique advantages of Laurel Road’s Dentist Mortgage
I
f you’re ready to purchase a home but aren’t sure what you can afford, there are a few different ways to estimate your maximum buying power. Your borrowing power is highly dependent on what you can afford to pay each month for housing plus taxes and insurance. And much of your hous- ing payment is derived from your mortgage interest rate, term and down payment.
When considering these factors, it’s essential to remain informed on what mortgage prod- ucts are available to you and their respective rates and financing options.
As dentists, you have a unique financial trajec- tory. Laurel Road recognized this dynamic and created the Dentist Mortgage which provides special financing options exclusively for den- tists. This exclusive financing option reduces the credit restrictions and cost to borrow,
enabling dentists to afford more home at any stage during their career.
THE 28% INCOME RULE
One of the common rules of thumb for making sure homeowners live within their means, is the 28% Income Rule. Financial advisors often recommend limiting your monthly housing expenses to 28 percent or less of your gross (pre-tax) monthly income. Let’s look at an example: With an annual income of $160,000 and a monthly gross of the $13,000, the rule would apply as follows: $13,000 X 0.28 = $3,640 for a monthly pay- ment, including principal, interest, taxes and insurance
The amount of principal and interest you will be approved for can vary depending on your home’s property taxes and the cost of home- owners’ insurance (which are often combined
Additionally, the amount you put down on your home is relevant, for it impacts your loan amount. The more you put down, the less the liability. So, while the 28% Income Rule can be a good rough estimate for what you can afford in monthly housing payment, speak- ing with a mortgage specialist and getting prequalified is the best solution. A mortgage specialist will create a solution tailored to your specific finances and find the product that best fits yours needs.
CONSIDER THE DOWN PAYMENT
MEDICARE ANNUAL ENROLLMENT IS
OCTOBER 15 – DECEMBER 7
Honest Answers / Practical Solutions / Personal Service 800-944-7550 •
MDIS4DDS.COM
24 focus | SEP/OCT 2022 | ISSUE 5
Before we compare income and home price, you will want to consider what down pay- ment you can make. For most borrowers, if you make a down payment that’s less than 20 percent of the sale price, you will typically have to pay for private mortgage insurance (PMI) on top of your total housing pay- ment. Laurel Road’s Dentist Mortgage allows eligible dentists the ability to apply $0 down and pay no PMI. Given this special financing option, your ability to afford a down payment may not necessarily dictate which homes you can afford, but rather provides you with the opportunity to decide how much you want to put down versus investing elsewhere.
RATE PLAYS A ROLE IN DETERMINING WHAT YOU CAN AFFORD
We talked about the total loan amount having an impact on monthly housing affordability. Rate has a significant impact as well, given the higher the rate, the higher interest you will pay each month. Through Laurel Road’s exclusive partnership with the ADA, you are eligible for a quarter percent discount off your mortgage interest rate. To make financing your home through Laurel Road’s Dentist Mortgage even more attractive, Laurel Road offers up to $650 in closing cost credit for using their digital platform for the application process.
CONTINUED PAGE 31
in an escrow account with your mortgage payment to make up your total monthly hous- ing expense).
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32
