What Mortgage Can I Afford
Mortgage has always been the most preferred way of funding a home. This is so as the price of property increases by the year and at times can double what it was in a matter of months!
Mortgage allows you to enjoy your monthly income without having to spend all of it on your home. However many often find it difficult to calculate how much they are willing to pay per month for their homes.
They are left to ponder the question: what mortgage can i afford? The following will help identify the process you need to go through in order to determine the number.
The Down Payment
It is important that you save money for down payment before anything else. This is usually 10% to 20% of the appraisal value of the home. With a higher down payment you prevent yourself from having to go through Private Mortgage Insurance and in the long run, you get to save from paying high interest rates as well.
For this reason be sure to secure sufficient down payment for your dream home.
Loan Qualification 28:36 Ratio
The number 28 is the ratio of gross income against housing expenses whereas the 36 is the ratio used to calculate your monthly payments for debt. In between both numbers is the margin.
SEE ALSO: Chase Personal loans bad credit
Make sure that the result of your monthly payment does not exceed that of your outstanding debt payment otherwise you will not be deemed eligible for mortgage.
Expenses on Housing
This refers to the taxes and home insurance that your home is subject of. After you add this to your home rate you will find the total expenses on your home purchase.
Now that you have done your calculation, you have several numbers that will help you answer the question of: what mortgage can i afford. A combination mortgage is often available in most areas where home seekers are not able to pay for sufficient down payment.
Down payment is often a tricky requirement for many households and mortgage options have therefore adapted to demands of the market.
Some mortgages will be conducted twice. The first is to pay 80% of the appraisal value and the rest of the 20% will be taken out following completion.
As well as this, the first time buyers program is also a preferable option with lower down payment options.
A broker will be able to help you through the process.
Looking for a home is one thing, funding your dream home is another matter.
Though your funds may be tight at the moment, it is important that you know what options you have before you give up. As they say, where there is will there will always be a way.