Special offer

Kansas City Real Estate - How Much Mortgage Can I Afford?

By
Real Estate Agent with Realty Executives of Kansas City

In the current market, interest rates are at an all time low, but lenders are being more strict about who they approve and how much they qualify for. Before you go to a lender for pre-approval you need to first decide how much you can afford.

First, look at your monthly expenses and choose a payment you are comfortable with. If you are currently paying $800 in rent now, would you be comfortable paying a $1300 mortgage? To find out, for the next few months take that extra $500 and put into a savings account, try living without that money for a few months to really determine if you are ready for that increase.

The lender is primarily looking at two factors in evaluating your qualification for a home loan.

·  The funds you have available for a down payment

·  Your continuing income for paying the monthly housing expenses

The lender will want to know if you have cash available for paying the down payment and other up-front closing costs. They are interested in your long-term debt, defined as any debt that will take more than 10 months to pay off.

Lenders look at two ratios of your debt and income. They calculate your percentage of debt by dividing the amount of money you pay each month to creditors by your monthly income. Remember that low ratios do not always lead to approval and high ratios don't always lead to denials. Other factors such as payment history are evaluated along with the debt ratios.

Bottom line is that you must be comfortable making your monthly payment. Prior to talking with your lender you should review your monthly expenses and income and determine what total monthly payment you are comfortable making. Then, take this number to your lender and they will help you work backwards to come up with a purchase price that supports that monthly payment.

Photobucket Photobucket Photobucket Photobucket

Brad Papa
Realty Executives
Brad@PapasInTheHouse.com
913.526.4985
http://www.PapasInTheHouse.com

Comments (0)