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Passive income is money that's earned from an enterprise which has little or no ongoing effort involved. Residual income is not actually a type of income, but rather a calculation that determines how much discretionary money an individual has available to spend after most monthly bills are paid.

One example of passive income is the profit realized from a rental home that is owned by investors that are not actively involved in managing the house. Another illustration is a dividend-producing stock that pays an annual percentage. While an investor must purchase the stock to see the passive income, no additional effort is required. .

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Residual income is a number that banks often compute when determining whether applicants can afford a mortgage. To calculate residual income, the bank determines the applicant's income, and then subtracts the anticipated mortgage, property insurance and taxation. Any monthly payments made to credit cards, installment accounts or student loans are also subtracted from income.

The amount that is left after the subtractions are done is considered residual income. .

Banks compare an applicant's residual income into the price of living in a particular area to determine whether the individual's budget is too tight to handle a mortgage. For instance, an applicant that lives in the South and has a family of four must have a residual income of $1,003 per month if he wants to take a loan backed by the Veteran's Administration. .

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This Website will help you decide which passive residual income sources is right for you based on your current time and assets

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The Main Principles Of Residual Income In Pakistan - Passive Residual Income

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