One of the biggest issues surrounding the mortgage application process today is the qualification process itself. It does not work the way it should work. How should it work? Well, that’s simple. When the consumer applies for a mortgage to help facilitate their home purchase, the process should involve a thorough assessment of their monthly cash flow situation, and then a determination of the mortgage amount they can afford should be made based on the income they have coming in and their expenses going out.
But this is not what happens.
Consumers are typically qualified for a mortgage based on a formula which only considers certain monthly expenses such as the proposed mortgage payment, property taxes, an estimated heating cost, loan payments, and any minimum payments they are required to make for credit cards and loans. That’s all.
I don’t know about you, but most people eat, put gas in their car, use some form of day care, and have smartphones with data plans, and many other expenses too. And to most of us, these are very real, and necessary monthly expenses.
What does this mean? Well it means that consumers taking on a new mortgage don’t have a complete picture of what their realistic monthly cash flow will look like because not all of their expenses were considered when they applied for their mortgage.
Using the Real Debt to Service Ratio (RDSR) Formula, you will be able to figure out exactly what your monthly cash flow situation is, and what mortgage amount makes sense for you. And once you know your ideal mortgage amount, affording your new home is much easier.
I can help you determine a realistic mortgage scenario for your financial situation and build a mortgage plan to get you mortgage free faster.
Order your Real Debt to Service Monthly Cash Flow Worksheet today! Or get it free when you purchase a copy of Get Mortgage Ready.