Determining how much home you can afford, or what payment you feel comfortable with, can be a trying process. Calling lenders, looking at mortgage loan programs and interest rates can be confusing, to say the least. There is an easy way to get started, and give yourself an idea of where you stand.
The first step is to find out what mortgage interest rates are at the current time. You can typically do this with a couple of phone calls to lenders or some quick looking on the internet. Get your rates on conventional, fixed rate or FHA loans. There are also tables available to see what your payment would be at different price ranges and interest rates. Payments might be higher or lower than those shown in charts depending on current interest rates.
To obtain a very clear picture of how much home you can actually qualify for, the best idea is to contact a reputable local lender and let them analyze your entire situation. The lender can calculate your debt to income ratio, do a quick credit score, and give you the information you need. Typically, on a conventional loan, lenders like to see a ratio not exceeding about 28%. This is strictly for your mortgage, and 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, with your mortgage included.
We work with very reputable loan officers and are happy to highly recommend any of one of them in your search for the right mortgage product. If you would like further information, please contact us today. We are happy to help!
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