How Much House Can You Afford?
Determining how much home you can afford, or what payment you feel comfortable with, can be a trying and confusing process, to say the least. There is an easy way to get started, and give yourself an idea of where you stand.
Most people focus on what mortgage interest rates are at the current time, with a couple of phone calls to lenders or some quick looking on the internet. Get your rates on conventional fixed rate loans. Now use this handy calculator to see what your payment would be, at different price ranges and interest rates. Payments might be higher or lower than those shown in the chart depending on current interest rates. This is not always the best strategy because it is not always about the rate. To find out about the three legged stool, how you qualify to a lender, come to our Free Buyer Class. Register here.
To obtain a very clear picture of how much home you can actually qualify for, the best idea is to contact a reputable mortgage broker, and analyze your entire situation. We can calculate your income-to-debt ratio, do a quick credit score and give you the information you need. Typically, lenders like to see a ratio not exceeding about 28%. This does not take into consideration long term monthly debt. As an example, to qualify for a loan, lenders may require ratios of 28% or 36%. This means you can spend up to 28% of your gross monthly income on a mortgage payment, and no more than 36% of your gross monthly income on all forms of debt, mortgage included.
We work with many lenders and would be happy to recommend one that is right for you. This is important, that you get the right loan for you, and it is not always about the rate. You can begin by filling out the Mortgage pre-qualification form and then we will set up a time to meet to go over your needs. We are happy to help!