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 loans. Now use this handy table 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.
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 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.
The combination of great rates and a buyers market have made NOW the time to buy! We work closely with a number of lenders to provide our customers and clients the absolute best in service. Our clients always come first! Contact us and we’ll be happy to help you. Email us anytime at John@JohnCJones.com or just give us a call at 615-867-3020.
A great question how much can I afford. If you work with a lender and are honest with your financial information they are best able to put you into a comfortable payment that will allow you not to be house poor or have adjustable rate that will change your monthly payment.
Having a steady job for 2 years and good credit and a significant downpayment will be the key.
I like getting the amount of home you qualify for and then looking for a home. It rules out all those that you don’t qualify for and get emotionally attached to.