1. To use the banker’s rule to determine the amount of money a person may borrow you may borrow up to 2.5 times your annual income annual income X 2.5 amount you may borrow

2. To find the minimum annual income required for a particular mortgage cost of house ÷ 2.5 = minimum (mortgage amount) annual income $225,000 ÷ 2.5 = $90,000 You must make this amount to buy this house

3. Computing the Down Payment To find the down payment, multiply the cost of the home by the rate of the down payment. $159,900 x.20 __________ $31,980.00 (down payment) To find how much remains to be financed, subtract the down payment from the cost of the house? $159,900.00 -$31,980.00 __________________ $127,920.00 (to be financed )

4. Mortgage Lenders: DIY or hire a Broker? Fixed-Rate Mortgage Description: Interest rate is fixed for an amount of time (years) 10, 15, 20, 30, or even 40 or 50 years. Pros: You know what your monthly payments will be. You can refinance if rates drop significantly.refinance Cons: If rates go down, you'll still be paying the initial rate unless you refinance. ARMs (Adjustable-Rate Mortgages) Mortgage Rates National Average CurrentLast Week 30 year fixed 3.78%3.33% 15 year fixed 2.93%2.54%