Affording your house starts with your lender.
Affording your house starts with your lender, and they decide what you can borrow, but you decide what you can afford. Lenders are particular, making qualification decisions based on averages and formulas. They won't understand the differences in your lifestyle and spending patterns quite as well as you do. So, leave a little room for the unexpected - for all the new opportunities your home will give you to spend money. Consider the costs of furnishings, landscaping, additions, and repairs.
Banks use a ratio to decide how much
Historically, banks use a ratio to decide how much borrowers could borrow. An approved housing payment couldn't be more than a certain percent of the buyer's gross monthly income and total debt load, including car payments, student loans, and credit card payments.
Be warned …
As home prices have risen, some lenders have responded by stretching these ratios to as high as 50 percent. No matter how expensive your market is, though, we urge you to think carefully before stretching your budget quite so much.
Your financial profile will change
Deciding how much you can afford should involve careful attention to how your financial profile will change in the upcoming years. In the long run, your peace of mind and security will matter most. Affording your house is more than making the mortgage payment. Your lender decides what you can borrow, but you decide what you can afford.
Robert Ellis | Realtor | Ellis Realty Group - Keller Williams Coastal Bend - North Padre Island 361-739-7219