One of the first steps of buying a home is determining how much home you can actually afford to buy. Understanding the factors that affect home affordability is critical - you want to make sure that the homes that you are looking at are within your budget. As always, the first step of course is to contact your lender (that's us) for pre-approval.
For most people, how much home you can afford is directly related to the amount of mortgage you qualify for. There are many factors that may impact your mortgage qualification amount.
While not factored into your mortgage qualification calculations, you'll also want to carefully look at all your other monthly expenses. While lenders may be willing to loan you more, it might not be in your best interest to stretch your home budget if you have a lot of other expenses.
Many different factors make up your total monthly mortgage payments.
There are also other home-related fees that you need to budget for.
In some situations, these fees are paid monthly with your mortgage payment. In other situations, you'll pay for these monthly yourself. However, you should still budget these into your monthly mortgage payment calculations and they will need to be paid regularly.
Your salary and monthly income is the biggest factor when it comes to how much home you can afford.
As a general rule of thumb, your monthly debts (including your mortgage payments) should be less than 36% of your gross monthly salary (before taxes). This is your debt-to-income ratio (DTI).
[(Total Monthly Debt Payments) / (Monthly Gross Income) ] x 100 = DTI
When making this calculation, you should include any of the following in the debt category:
An experienced loan officer or advisor can help you determine the right home budget for your financial situation.
We hope this article was of value to you. For more great tips, bookmark our site and for all your mortgage needs, visit the A Team at TMFFMS.
#tinaalexiou, #floridamortgagespecialists, #howmuchcaniafford