Total housing expense,
Definition of Total housing expense:
A mortgage cost is largely made up of loan interest and principal payments. Some mortgage also have escrow accounts that pay out property taxes and mortgage insurance (PMI). However, other ongoing home expenses must be factored in to affording a home.
The total amount that a homeowner spends on mortgage payments, property insurance, homeowners association fees, property taxes and other home-related reoccurring expenses, plus whatever amount is required to service all outstanding household debts. This number is used by financial institutions to calculate creditworthiness and interest rates for loans.
Total housing expense is the sum of a homeowner's monthly mortgage principal and interest payments plus any other monthly expenses associated with their home such as insurance, taxes or utilities. Total housing expense is a key component in the calculation of a borrower’s housing expense ratio which is used in the underwriting process for a mortgage loan.
How to use Total housing expense in a sentence?
- Total house expense is essential in determining whether a borrower can truly afford to carry the home that they wish to purchase.
- This will include monthly bills, insurance costs, taxes, and homeowners association dues in addition to mortgage interest and principal.
- Total housing expense adds up all of the relevant ongoing costs needed to maintain home ownership.
Meaning of Total housing expense & Total housing expense Definition