How Much Home Can You Afford?
Most people have a general
idea of how much they feel comfortable spending. It's equally important to know how much your lender calculates you can afford. With assistance provided by your 1st CHOICE Realty sales professional, you'll be able to better prepare the
many details required during the financing application process.
Evaluate your financial situation as the lenders do. Typically, your total monthly housing costs should not exceed 28 percent of your gross monthly income. Or, housing
costs plus any outstanding monthly long term debt (car loans, credit card balances, etc.) should not exceed 36 percent of gross monthly income.
Ask how your lender determines the total monthly housing cost figure. It usually
includes your mortgage principal and interest payments, property taxes and hazard insurance.
Determine how much your financial institution is willing to lend you by completing our Mortgage Calculator or calling your 1st CHOICE
Realty sales professional for help during the prequalification process.
Know how much you can afford in monthly payments. Lenders factor in sales price and down payment, but place more importance on how much you can handle your
monthly expenses.
Become a preapproved buyer. Preapproval gives you more buying strength since the lender makes a credit decision and preapproves you for a certain mortgage amount. You'll know what price range your lender will
approve -- and you'll be in a position to make an offer as soon as you find the right home.
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