Other Calculators:

         Mortgage-info.com has many good mortgage calculators.

         Here is a list of some buy versus rent calculators showing how buying can easily save you thousands of dollars over a five to ten year period:

• New York Times with excellent graphic but without total savings.
• eLoan calulator
• AOL calulator
• Freddie Mac calulator

         AOL has a good mortgage affordability calculator. The essential fields you may not be familiar with are the Front-end Ratio and the Back-end Ratio. The lowest ratio of the two determines the maximum payment allowed by the lender. In California, the higher front-end and back-end ratios are usually allowed. Your credit score also contributes to the allowable ratios.

         The Front-End Ratio is defined as a ratio that indicates what portion of a borrower's income that is used to make mortgage payments. It is calculated as a borrower's monthly housing expenses divided by his or her monthly gross income and is expressed as a percentage. Monthly gross income is simply annual income divided by 12 (months). Lenders use the front-end ratio in conjunction with the back-end ratio to approve mortgages. The appropriate equation is shown below:

        For example, if your annual income is $60,000, your monthly income is $5,000 (60,000/12). By using front-end ratio (28-36%), you can figure how much of that $5,000 you can allocate to your mortgage payments. If the required front-end ratio is 33%, you can allocate $1,650 (5,000 x 0.33). Thus, if your PITI is $1,550 or less, you would be approved. Typical monthly housing expenses include the mortgage principal, interest, taxes and insurance payments known as PITI.

         The Back-End Ratio or debt to income ratio is defined as a ratio that indicates what portion of a borrower's income that is used to pay all of his or her debts. Total monthly debt includes expenses such as mortgage payments (made up of PITI), credit-card payments, child support and other loan payments. Lenders use this ratio in conjunction with the front-end ratio to approve mortgages. The appropriate equation is shown below:

         For example, if your monthly income is $5,000 ($60,000/12) and your total monthly debt payments are $2,000, your back-end ratio is 0.40 or 40%. Generally, lenders like to see a back-end ratio that does not exceed 40%; however, there are lenders who make exceptions for ratios of up to 50% if you have good credit. Some lenders consider only this ratio when approving mortgages, as opposed to using it in conjunction with the front-end ratio.