Welcome to professrsavings.com, we teach finance basics.
Today we will teach you easy ways to get a cheaper mortgage about two minutes.
Hi I’m your host Rayfil Wong.
Residual income is simply excess cash on a monthly basis.
This is calculated after all the required payments are made including mortgage payments, bills, and other debts.
Let’s say that Professor Savings applies for a loan to expand his cupcake business.
The bank ask Professor Savings to show a record of how much he pays out each month in expenses such as car, credit card, and mortgage payments.
Let’s say that Professor Savings brings in $5,000 a month but after all his expenses he is only left with $400 this allows the lender to understand more accurately how much is left over.
Residual income is a major factor in loan offers since banks want to make sure they get their money bank.