Wednesday, April 5, 2017 - Article by: MEL SMITH--LENDER OF THE MONTH - Meadowbrook Financial Mortgage Bankers -
To establish 'how much house can I afford', the typical rule is that your monthly expenses should not surpass 36%. The 36% rule is based on dividing your monthly mortgage payments and other monthly debt payments by your gross monthly income.
Important factors in gauging affordability are
1) Your monthly income
2) Available funds to cover your down payment and closing costs
3) Your monthly expenses
4) Your credit profile
Income - Money that you receive on a regular basis, such as your salary or income from investments. Your income aids to establish a baseline for what you can afford to pay on a month-to-month basis.
Funds accessible - This is the total of cash you have free to put down and to cover closing costs. You can utilize your investments, savings or other monetary
Debt and expenses - It's vital to take add into the planning other monthly responsibilities you may have, such as credit cards, car payments, student loans, groceries, utilities, insurance, etc.
Credit profile - Your credit score and the total of debt you owe sway a lender's assessment of you as a borrower. Those elements will aid to determine how much money you can borrow and additionally what interest rate you will be charged. Take the time to check your credit score.
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