Let me help you in answering this exciting question of "How Much House Can I Afford?"
Evaluating how much house you can afford or what payment would be best for you isn't too tough to calculate actually. Here's a couple quick tips to figure out what's best for you:
1. Ask your lender. If you don't have a preferred lender, get in touch with me because I know some of the best in the business and would love to get you connected. Ask them to go over the mortgage loan programs and interest rates with you. That's a great way to get a great start. This will give you you a solid idea of where you stand.
2. Know the current mortgage interest rates. Typically, you can knock this out with a couple of phone calls to lenders or a quick online search. Checkout bankrate.com for a generic estimate. Or if you just text or call me, I can always let you know what my clients interest rates have been most recently. Just remember to get your rates on conventional fixed rate loans.
3. Request a pre-approval or at least a pre-qualification. What's the difference? Watch this quick video. To know for sure how much home you can actually qualify for, the best idea is to contact that reputable local lender and let them analyze your entire situation.
4. Calculate your debt-to-income ratio. The lender should help you calculate your income-to-debt ratio, do a quick credit score and give you the information you need. Just so you know, lenders like to see a ratio that does not exceed around 28%. This does not include long term monthly debt. For example, to qualify for a loan, lenders may require ratios of 28% or 36%. That means you can spend up to 28% of your gross monthly income on a motgage payment, and no more than 36% of your gross monthly income on all forms of debt, mortgage included.
If you want to answer this question without using a lender, try this tool.
Know that we work with a number of loan officers and would love to recommend the best one for you. Email me, or just give me a call. Excited to help!