How much home can I afford to buy?
What mortgage payment would fit into my monthly budget that has other financial obligations to meet? There are some that just don't know for sure what a bank mortgage home loan underwriter would say is the magic number when buying a home. Others who know they don't care how high the "loan arranger" says they can afford but tie it to what they are already paying for rent.
A lot of renters are paying way way beyond the monthly lease installment they technically can afford.
Fixing this, mowing the lawn, paying for utilities that should be on the house meter but that are not. The worry for a home buyer about property taxes, property insurance and upkeep can make the house payment be a small part of the obligation. Many renters are just over spending, paying more than they can afford for their rental units which makes the cushion of extra cash missing in their wallet or purse. And that's why so short on closing costs or getting behind on other payments when something unexpected comes up needing immediate attention. It used to be one flavor or local home loans too, that involved a hefty twenty five percent down payment or forget even trying to get a house mortgage.
So back to the headline of the blog, the question about how much home can I afford? The two rules of thumb batted around if everything is equal is one week's paycheck allocated to housing. Or the other real estate axiom is two and a half times your yearly salary. I prefer to gravitate to the one quarter of your monthly income. So money is left over for other essentials like groceries, house repairs, kid's braces, family entertainment, credit cards, car paymentets etc. Here is one debt to income calculator to fill in the numbers and run some financial scenarios.
The debt to income ratio is just as important as a good credit score and paying your bills on time month after month.
The debt to income ratio is the percentage of your gross income required to cover your housing and debt payments. The lower your debt-to-income ratio the easier to carry your debt load will be. A low debt-to-income ratio increases the odds that you will be able to meet your monthly obligations and not miss any of the payments. This debt to income ratio and your credit score are the two most important factors used by creditors when extending home loans and offering additional credit in lending exercises.To much debt and the odds proven by the numbers if the debt ratio gets too high means everyone loses.
Calculators for buying a home in Maine.
You need to know more than just what is my monthly house payment going to be if the loan is this long a term for the mortgage at this particular interest rate. Debt ratios on how much you make, how much you spend now and what this new home payment is going to weigh in at is part of the mortgage home loan underwriting.
How much house can I afford, what home payment can I swing according to the experts with the vault combination to spin the tumblers and open the safe?
There is what is called the front-end ratio.
A standard rule for home bank lenders is that your monthly housing payment (principal, interest, taxes and insurance) should not take up more than 28 percent of your income before taxes. This debt-to-income ratio is called the "housing ratio" or "front-end ratio." Here is another debt to income ratio calculator to try out and crunk the housing numbers custom made for your financial situation.
Here are some great online calculators for real estate that cover all kinds of practical figuring. From rental income to debt ratio, for how much can you afford for your rental unit. To figuring out what you still owe on your current home loan and what if you make lump sum pre-payments. To retire it early but not choke yourself too tight in the process. Area for building materials and to figure out the square footage or acreage all in this handy suite of online calculators for real estate related matters.
Spend some time in this link. The maximum debt to income ratios for Maine mortgages outlined. Just like only certain houses would fit the needs of the home buyer, not everyone qualifies for the same Maine housing financing. We shop to find what will work best early on knowing the listing. So delays and starting over with a new home loan program are not needed later on. Time is money, deals in real estate can die and bleed out. Just because there is no extra time or simply not enough. Folks move on or better situations present themselves. People do what is best for themselves and should when housing for their famlies is at stake.
If a buyer can not make a house purchase, the sooner that is learned helps all involved in the mortgage loan underwriting.
So "Next" can be hollared and other buyers can crowd into the turnstyles.
Always get pre-approved for a home loan before looking for a houses to buy! There is nothing worse than an approved home buyer who learns after the appraisal, the week of the real estate closing they are no longer approved for a home loan. Why does that happen?
Causes for last minute home loan disapproval.
Don't want a home loan denial. Stay on the same job for two years, don't buy a new car or major expense credit card item that messes up your debt to income ratios, don't get divorced. Basically keep your nose clean, be a legal beagle and steady she goes with employment and spending.
The seller is all packed and on his way to new digs to free up the old ones. The buyer all packed too and whoa, what do you mean the home loan was denied? The legal opinion on the property could be a source of the hold up but the agent or broker should have seen that one coming unless the title property hidden thirty years back.
It is exciting to buy a home, to be part of the community as a property tax payer and vote on important local decisions.
Spending holidays making family traditions, enjoying the backyard get togethers and watching your kids grow up big and strong.
Where you live, creating the investment that provides housing and gets paid off at the same time is the American dream.
Here to help real estate buyers and sellers in Maine whether it's financing a home or anything you have for questions needing answering about property listings, about the local communities we post about to expose the small town way of living.
MOOERS REALTY 69 North Street Houlton Maine 04730 USA