It certainly helps a real estate agent convert potential clients to buying clients when we can qualify them early. Questions such as what price can I purchase can be answered by determining the comfort payment level regardless of whether they can qualify for more house. Ask your client what are they comfortable paying in a house monthly payment (PITI), and how much are they planning on putting down. To calculate this you can do a close estimate for them. Say the comfort payment is $5,000 (PITI). Multiply by 80% (this is a shortcut number I use for my area) = $4,000 PI. Use this as Payment on your calculator, at say 6% interest, 30 year fixed term, then do Present Value (PV)= $670,502.29 Maximum loan amount, divided by LTV, in this case say 90%, or .90 = $$745,002.54 Sales Price. You may use a lower shortcut number such as 70 or 75% depending on your area to get your PI, but it is just an approximation. Is this useful to you? Plug in your numbers and you should have an estimate for your clients. Especially new homebuyers! You should, however, refer your clients to a Lender for pre-approval before you make your offer! For questions please call me at my cell phone (415)260-9539, or email me at nancy@bradleyrealestate.com or newday_3@ix.netcom.com Be sure to visit my web site: www.nancyrileyrealestate.com
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