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Mortgage
How Much Can You Afford
If you wish to
purchase a house the most important thing is you need to get a
mortgage.You cannot put all your savings and get a house.So it is
advisable to get a mortgage and repay it as monthly installments.
When you have to get
a mortgage you should know how much you can afford every month as
your monthly payment.This mainly depends on our income and
expense.This income and expense is considered as debt to income ratio
as per the field of mortgage.
Debt to income ratio
is defined as the percentage of the monthly income to the monthly
debts that has to be paid.It is said that the monthly mortgage
payments as well as your other debts should not be more than 33% to
38% of your monthly income.
Consider
your financial status at the moment
When you are ready
to purchase a house first consider how much you can afford to buy a
house.The next step will be the down payment which you can make and
the amount which you are going to get as mortgage.Then try making
some math calculations of your monthly debt payments and how much you
can afford to pay as your monthly mortgage payment.
The
cost of housing
Also include the
utility costs for your new home when you make the calculations.The
interest,principal and tax should be considered together with the
monthly payments and they should not be more than 28% to 30% of the
gross income.
Your
dues
This includes not
only your monthly mortgage payments but your credit card bills,auto
payments,child support,student loans or any other loans or debts
which you need to pay every month.Make sure that the debts do not
exceed 35% to 38% of the gross income.Also the interest rate for the
mortgage loan will be dependent on the debts which you have.If you
have more outstanding debts then the rate will not be so very
attractive. Not only your debts matters also consider your monthly
living expenses like food,electricity,gas for your vehicle etc.You
have to spend even for these requirements. All these calculations are
made to let you know how much can you afford for your mortgage every
month.
Be
careful while shopping for a mortgage
The lending market
is so competitive that the lenders act as sales people.They even try
to convince you to get more than what you can afford for.So be
careful when you go into the market and be clear of how much mortgage
you can afford to pay as your monthly payments.
Choose the best
deal and be careful not to overload yourself. |
