is very happy about the house you want to own or browse a few real estate listings. But once you see how much these houses cost, it can become very frustrating. Buying a house can be stopped here, which means that if you buy a house you don't know what to do and what to think about. Now, if you decide to continue to own your dream home, here is the most important question you should answer: What can you afford?
Buying a home is a matter of choice. But most of the time, you can't simply point your finger at the ideal home in the best neighborhood in town, right? Especially if you realize that you should have the money to buy it. Unfortunately, you must solve what you can afford, which may lead you to another depression. So, first of all make sure you know that your financial restrictions are your first step in owning a home.
When you want to know how much you can afford, there are three main factors to consider:
1. How much money you have on hand for down payment and closing,
2. How much home mortgage and interest can you afford, and
3. The loan amount the lender will approve.
Savings are very important, especially if you are ready to buy a house. Saving money will give you a better chance of having a better, more expensive home. This is because the amount of down payment you can afford will certainly reduce the remaining cost you must pay for the house, which in turn will lower your home mortgage, making monthly payments cheaper. Therefore, it is recommended that you save as much as possible on the down payment in order to buy larger homes or reduce home mortgages.
However, this does not mean that if you do not have enough savings, you cannot own a house. Prepayments can be anywhere between 5% and 20%. Therefore, even if you are able to pay 5% of the total down payment, you can still close the deal. You just need to think better about the cost of home mortgages. Because in the end, your monthly payment will be the decisive factor that you can afford (discussed below). The transaction fee can be between 2% and 6%.
The answer to how much home mortgage and interest you can afford depends on two major factors: (1) your monthly income or annual income; (2) your monthly debt obligations, such as car loans, child support payments, , credit card payment and so on. Ideally, the payment-to-income ratio should not exceed 28%, and your debt-to-income ratio should not exceed 36%. Most lenders use the payment-to-income ratio and the debt-to-income ratio to determine how much you can afford.
For example, if you are approaching, say $6,000 a month, your mortgage payment should not exceed $1,680, and your total debt should not exceed $2,160. More will put a lot of pressure on your financial situation.
The number of lenders approved by the lender will depend on your income, credit reports and other factors. This is why you must have a good and permanent source of income and a good credit score in order to obtain a reasonable loan line. Although loans can be approved for people with bad credit ratings, interest may be surprisingly high.
If you want to know exactly what you can afford, you can use several online mortgage calculators for free.
You buy a house not often. In fact, most of us may be able to buy home in our lifetime. So when you do this, you want the process to be as smooth as possible. First consider how much you can afford, and then look at the listings you want and the surrounding houses. Oh! Don't forget to seek professional advice from a loan consultant and get pre-approval to make the entire home purchase process easier and more convenient.
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Orignal From: Home Mortgage - What Can You Get?
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