Debt-to-Income Ratios and Car Payments

When determining your ability to qualify for a mortgage, a lender looks at what is called your "debt-to-income" ratio. A debt-to-income ratio is the percentage of your gross monthly income (before taxes) that you spend on debt.
This will include your monthly housing costs, including principal, interest, taxes, insurance, and homeowner’s association fees, if any. It will also include your monthly consumer debt, including credit cards, student loans, installment debt, and car payments.

How a New Car Payment Reduces Your Purchase Price

Suppose you earn $5000 a month and you have a car payment of $400. At current interest rates (approximately 8% on a thirty-year fixed rate loan), you would qualify for approximately $55,000 less than if you did not have the car payment.
Even if you feel you can afford the car payment, mortgage companies approve your mortgage based on their guidelines, not yours. Do not get discouraged, however. You should still take the time to get pre-qualified by a lender.
However, if you have not already bought a car, remember one thing. Whenever the thought of buying a car enters your mind, think ahead. Think about buying a home first. Buying a home is a much more important purchase when considering your future financial well being.


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1 Comments on Important Things To Avoid Before Buying a Home Part 4

OCT
23
2009

I believe that home buying is a historical decision in one's life. So, full care should be taken to avoid any discrepencies and future problems. So, it is always advisable to do bit research before going for home buying. I could say that the points discussed here are informative and will help a lot.

High CD Rates
Nathan
2:35pm • #1


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Pat Ogle Associate Broker,CRS,GRI,ePRO Annapolis, Maryland Homes For Sale

Annapolis, MD

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Welcome to Annapolis MD Real Estate, Waterfront Properties, Homes For Sale and Relocation. We are dedicated real estate professionals specialize in Waterfront Properties, Homes For Sale and Relocationin, in Annapolis Anne Arundel County, the Eastern Shore and the surrounding areas in Maryland. Selling or buying a home can be an intimidating process. How much is the property actually worth? What types of inspections are necessary? What are current mortgage rates and how will they affect your ability to sell or buy real estate? You can check out the current news on the real estate market and find tips on selling or buying a home.Or, call today for a personal consultation - 410.224.0660


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