How Much Do I Qualify For?
Above all, you (and your family) should set up a monthly budget to determine how much you can spend each month for housing. The answer to that question should be known before you move forward with the process of seeing how much you qualify for. You should know how much your budget will support before you meet with a mortgage consultant. In the end, it doesn't matter how much your mortgage consultant tells you that you can afford - it's up to you to make the monthly payments.
Determine the ratios that are allowed for the program you're looking for. If you haven't yet read the discussion about the balancing act of qualifying for a mortgage, you might find it helpful. Some examples:
- FHA - frond-end of 29%; back-end of 41%.
- VA - back-end of 41% - with a monthly reserves requirement. Talk with
your mortgage consultant for help with how to determine your VA loan amount.
- The standard conventional ratios are a front-end of 28%, and a back-end of 36%.
Visit mortgage calculators, then on 'what house can I afford' - use .9% for the tax rate in this calculator if you're interested in resale or 1% if you're buying new construction, .39% for insurance, and you're off to the races.
Keep in mind that lenders now use automated underwriting when evaluating a client's loan application. This means that a computer will most likely decide if you're qualified to buy a home, and how much you're qualified for. In some cases the minimum guidelines can be exceeded - please talk with your mortgage consultant about how automated underwriting will impact your home loan process.
As always, mortgages are subject to credit approval. Qualifying for any given mortgage is dependent on a combination of your credit history as well as your income and financial assets. In most cases your credit score is critical as well.
Last updated: Monday, 10-Nov-2008 10:04:29 EST
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