Use These Three Guidelines To Determine How Much You Can Buy
Because of the long-term nature of mortgages, it can be difficult to understand exactly how much you can afford to pay on housing and what kind of house those payments will get you. Fortunately, there are a few factors that determine how much you can afford and using these guidelines can help you get an accurate estimate. Knowing how much you can afford will be a snap when you consider:
- Income: Most mortgage lenders will have a benchmark of how much of your income can be designated towards your housing costs in order to prevent people from carrying loans they will not realistically be able to pay off. Say, for example, that you earn $5,000 each month and the lender determines that 30% is their benchmark. In that case, you could put $1,500 towards your mortgage each month.
- Debt: In a similar way, the amount you will pay on your housing plus the amount you pay towards your existing debt each month cannot exceed a certain percentage. Ask a real estate expert to determine where these percentages are at for most mortgage lenders.
- Cash: The amount of cash you have ready to put down towards a down payment and closing costs will also limit how much house you can buy. Say, for example, that you earn $5,000 each month but only have $5,000 ready to put towards a down payment. The means that with a 10 percent down payment, you will only be able to get into a $50,000 of house.
You deserve to have expert home buying advice and flawless escrow services. To get the superior service you need, contact the escrow experts at Brighton Escrow in Hermosa Beach, California. We are full service, independent, and bonded and licensed so we can offer you a high level of care backed by professionalism. Call us today!