Tag Archives: current debt
When refinancing my mortgage – How Can I Determine My Payment Terms?

1254516095q7S3i1When refinancing, determining the right term of your loan is an important decision, after all you want to continue making your mortgage on time, with little or no addred stress to your life. If you are currently in a 30 year mortgage, you most likely would consider doing a 25, 20, or 15 year term, but it it the right decision?

Having spoken to accountants and financial advisers, there are several schools of thought on refinancing.  Many think you should stay in a long term (30) mortgage, while others think going to the shorter term (15) is the way for folks to plan.  Sometimes the decisions are based on your income tax bracket and others, which I have listed below for your consideration:1.  How long do you plan to stay in your current home? 

  • Are you subject to a potential job transfer?
  • Are you considering downsizing in the near future?
  • Is your company going through a re-organization

2. How long have you been in your current mortgage?

  • Does the lower rate make good sense?
  • Have you lived in the house long enough to have some equity built in?
  • Maybe keeping the same term and reducing the rate, makes good sense for your cash flow, releasing more funds to pay down other debt.

3. Can you afford the shorter term?

  • Can you afford shortening the payment; for example from a 30 year term to a 15  year?
  • What is your current debt to income? 
  • How much will you save?  For example, if you have a 30 year term with 25 years remaining and refinance using a 15 year, you have just reduced 10 year of principal and interest savings.  This can be significant, but can you afford the payments?

Here is the bottom line, you are unique. Yes, everyone has their own particular set of circumstances as to whether or not to lessen, remain the same, or even extend the term of their exisitng mortgage. 

At Delaware Financial Capital Corp., our job is to help you ascertain what makes sense for you.  Give our team a call at 302-266-9500!  We will brainstorm with you to see which term makes the best sense for you and your family.

 

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Are you Ready to Purchase a Home? – How much can you afford?

describe the imageIf you rent the home you live in or thinking about upgrading to a larger home or moving to another area, then the right planning can help you to purchase a home.

To discover your homebuying potential,  you will want to calculate your:

  • Income
  • Savings
  • Monthly Expenses
  • Current Debt

These factors determine how much of a loan you can afford and how buying a home will affect your monthly budget, once you compute all your expenses.

What is your Income?First you need to determine all of your sources of income. You will need money for your down payment and for your closing costs.  The FHA, VA and other mortgage programs may require smaller down payments.  In some cases the closing costs may sometimes be rolled into the mortgage or you can get seller assistance.Here are a few questions to help you to estimate your financial position.•    What is your average monthly income?
•    Do you expect your income to remain level in the near future?
•    If not, do you expect it to increase or decrease?

 

Use the following income categories to estimate your monthly income:

Income Category

Monthly

Borrower’s Salary

$

Co-Borrower’s Salary

$

Taxable Interest

$

Investment Dividends

$

Other Income

$

How much will you need for your Down Payment?Do you have Savings, Investments, Stocks or other Liquid?Add up your savings. Any money saved can help you buy a home. Your savings can be used to pay the down payment and/or closing costs. You know your own saving habits, the more you save the better and the more you put down on your house, the lower will be your monthly payment.

•    What portion of your income are you saving now?
•    Can you afford to put more money into savings?

Use the following savings categories to estimate your monthly savings.

Savings Category

Monthly

Savings Account

$

Checking Account

$

Retirement Fund Contributions

$

Stocks, Mutual Fund Investments

$

Other Savings

$

              
          
Monthly Expenses – Do you know where your money is going?How much are you spending each month? You can expect your monthly expenses to go up when you buy a home. Will you have enough money to pay the mortgage, insurance and property tax in addition to your other expenses?

Use the worksheet below to calculate the money you currently spend each month.

 

Expense Category

Monthly (current)

Utilities

$

Car Expenses

$

Insurance

$

Medical Expenses

$

Clothing

$

Taxes

$

Entertainment/Purchases

$

Child Support

$

                        
How Much Debt do you Have?Review your current debt obligations.  We examine the ratio of your debt to your income when deciding how much money to lend you.  Consider how additional debt from house payments, added to your existing debt, will affect your lifestyle.

Debt Category

Monthly

Credit Card

$

Car Loans

$

School Loans

$

Alimony

$

Child Support

$

Other Personal Debt

$

Wow! There is a lot to consider when buying a home.  Rest assured, if you are on this page right now you are on the right path.  Please feel free to let us know if you have any questions.

Still have questions?   Just give us a call at (302) 266-9500 or simply click the button below to contact Sam.

 

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