Home Mortgage Loan How Much Can You Afford

Home Mortgage Loan How Much Can You Afford

Home Mortgage Loan: How Much Can you​ Afford?
Description: Potential home buyers are faced with a​ critical decision; how much can they afford to​ borrow from a​ home mortgage loan? the​ decision on​ how much of​ a​ home mortgage loan you​ can take on​ will depend entirely on​ your monthly expenses and how much household income is​ earned .​
You don’t want to​ have to​ scrimp and save each month in​ order to​ make your home mortgage loan payment; so what do you​ do?
Get your finances in​ order
When you​ are ready to​ buy a​ home,​ to​ figure out how much money you​ can afford to​ spend on​ a​ home mortgage loan,​ you​ will have to​ do some math .​
You first need to​ decide how much of​ a​ down payment you​ can make and deduct this from the​ price of​ the​ home .​
What is​ left will be what needs to​ financed by a​ home mortgage loan .​
To find out how much you​ can afford each month,​ you​ need to​ calculate the​ rest of​ your bills first.
The cost of​ housing
Each month,​ the​ taxes,​ interest and principal on​ a​ home mortgage loan shouldn’t be more than 25%-28% of​ your pre-tax,​ gross income .​
This figure will also depend upon how much debt you​ have to​ start .​
You will also need to​ add in​ utility costs for your new home as​ well.
Your outstanding debt
To get this figure,​ you​ will need to​ include not only the​ home mortgage loan payment,​ but any credit card bills,​ child support or​ alimony payments you​ make,​ student loans and any other outstanding monies you​ owe .​
This figure should not be more than 35% of​ your pre-tax,​ gross income.
The rate you​ will be offered will be decided by the​ amount of​ debt you​ have outstanding,​ not just your income .​
This is​ called your debt to​ income ratio .​
If you​ have a​ lot of​ outstanding debt,​ your rate will not be as​ attractive as​ those offered to​ people who are carrying less of​ a​ debt burden .​
It is​ for you​ to​ understand how much money you​ can afford to​ pay a​ home mortgage loan each month and not the​ lender.
What to​ beware of​ when shopping for a​ home mortgage loan
The lending market is​ saturated with unscrupulous lenders who are only looking to​ make a​ sale .​
That is​ why it​ is​ so important you​ have a​ handle on​ your financial picture .​
Many times home mortgage loan officers try to​ convince you​ to​ take out a​ higher loan for a​ home you​ cannot afford.
Loan officers realize that the​ first bill most of​ us pay is​ the​ mortgage .​
They also know that your home mortgage loan will soon be sold to​ another company and that should any problems arise with paying back the​ loan,​ it​ won’t be their problem .​
They will already have made their commission and moved on​ to​ the​ next customer while you​ are saddled with payments you​ can’t afford.
Do your homework before deciding how much to​ spend on​ a​ new home .​
Take into account all your monthly expenses,​ not just debt and housing costs .​
You will need food,​ electricity,​ phone,​ and insurance,​ along with the​ myriad expenses that crop up each month .​
Be a​ smart home mortgage borrower and know all the​ facts before you​ sign on​ the​ dotted line.

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