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When planning to buy real estate, one should complete a planned expense
statement. An expense worksheet will allow you to plan how much you can
afford for a new house. The statement can also allow you to calculate
your Housing and Debt Payments Ratios.
Below is an example of an expense statement:
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PLANNED MONTHLY INCOME AND EXPENSES |
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Monthly Pay (Gross) |
$4,700 |
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Monthly Pay (Net) |
$3,050 |
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Monthly Interest Income |
$0 |
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Monthly Other Income |
$0 |
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Monthly Income (Net) |
$3,050 |
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$895 |
Mortgage |
$2,155 |
|
|
$210 |
Property Taxes |
$1,945 |
|
|
$75 |
Property Insurance |
$1,870 |
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|
$0 |
Condo Fee |
$1,870 |
$1,180 |
|
$325 |
Auto Loan |
$1,545 |
|
|
$125 |
Credit Card 1 |
$1,420 |
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|
$125 |
Credit Card 2 |
$1,295 |
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$0 |
Alimony |
$1,295 |
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$0 |
Other Debt |
$1,295 |
$575 |
|
$167 |
Car Insurance |
$1,128 |
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$75 |
Electric |
$1,053 |
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$0 |
Gas |
$1,053 |
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|
$40 |
Cable |
$1,013 |
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$50 |
Phone |
$963 |
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$24 |
Internet |
$939 |
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$73 |
Gasoline |
$866 |
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$450 |
Food / Other |
$416 |
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$2,634 |
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Calculated Results:
$1,180 / $4,700 =
0.25 = Housing Ratio
( $1,180
+
$575 ) / $4,700
= 0.37 Debt Payments Ratio
$2,634 = Total Monthly Expenses
$416 = What's Left = Disposable Income
($3,050 - $2,634) Please note that personal savings
is not taken into consideration above, and one should try and save via their
employer's 401k plan or deduct some savings in the worksheet above and
consider it an "expense."
(That is, plan on saving something.)
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Real Estate 101 Page
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