Question

Discuss: adjusted monthly income and the probability of mortgage approval.

Answer 1

1. Adjusted monthly income is computed as -

Total monthly taxable income less specific dedications as determined by Internal revenue service.

Calculate your Gross annual income considering - salary, taxable interests received,rental income etc.

From this, deduct the IRA Contributions, HSA Contributions, Qualified moving expenses etc.

Then, the amount is adjusted annaul income.

DIvinding this by 12 gives the Adjustd monthly income.

2. Probability of mortgage approval

This is basically the chances of getting your mortage approved. It depends on various factors like - Income for the past 2 years, Assets, Liablitiles, Current out go of EMIs for the existing loans, Cost of property, Down payment one is willing to pay for the property.

Inorder to improve the chances - No default on any bills in the past couple of years. Also,the loan amount required should not be more than 4 times of annual income. The down payment should be atleast 20% of the property value, and the credit score should be more than 740 for getting the better rates.