Sarah and Alex each earn $4,000 a month. Traditionally, their maximum housing payments would be 28 percent of their incomes, or $1,120.
However, their financial profiles are really very different, leading them to very different decisions about how much they can afford. See below:
Sarah has $15,000 in student loans, just bought a new car, and has several credit cards with balances. | |
Car payment | $350 |
Student loans | $150 |
Credit card minimum | $150 |
Monthly nohousing debt | $650 |
Maximum total debt payment | $1,440 |
(36 percent of $4,000) | - $650 |
Safe housing payment | $790 |
Alex's student loans are paid off, he has little credit card debt, and his car is an economy model. | |
Car payment | $200 |
Credit card minimum | +$50 |
Monthly nonhhousing debt | $250 |
Maxiumum total debt payment | $1,440 |
(36 percent of $4,000) | - $250 |
Safe housing payment | $1,190 |
1. Choose a loan officer |
2. Make a loan application and get preapproved |
3. Determine what you want to pay and select a loan option |
4. Submit to the lender an accepted purchase offer contract |
5. Get an appraisal and title commitment |
6. Obtain funding at closing |
Remember, you don't need to save up a lot of money for the down payment. A conventional mortgage can require as little as a 5 percent down payment, and there are even some first-time buyer programs and FHA loans that require even less. And once again, only you can decide what you can afford.
For the last twenty years, the mortgage interest rate averaged approximately 8 percent in the United States. What are the interest rates today and what would your savings be? The answer is less than half of the 20 year average which means now is the time to buy. Call us today if you have any questions getting started 859-653-9286