How much home can you really afford in Chandler Arizona?
When it comes to buying a home in Chandler, and figuring out
how much you can afford, there are a lot more factors than just how
much money you make. There are factors such as credit score,
credit history, and available cash that will also determine how much
home you can, or should buy. Everyone knows that qualifying
for a loan these days is much more difficult than four years ago, and
to some extent, that is a good thing. At the same time, if
you are in the market to buy, here are some things you should be aware
of given today's current lending environment.
Credit Score -
The lower your credit score, the higher your interest rate will be when
qualifying for a loan. If your credit score is too low, you
will not even qualify for a loan. To qualify for an FHA loan,
most lenders will require you to have a credit score between 620 and
660. For a conventional loan, your credit score needs to be
above 680, and preferably over 720. The higher interest rate
you pay on your loan, the less of a home you can buy, so having a good
credit score can help you buy more with your money.
Credit History -
Along with your credit score, lenders will look at your credit history.
This includes the number of revolving accounts you have, the
balance on those accounts, and how much you pay each month on these
accounts. These revolving accounts include all credit cards
where you carry a balance each month. This also includes
other things like car loans, student loans, and any other monthly debt
payments you make, including rent or a current mortgage. It
is critical to maintain a low balance on any of these accounts if at
all possible and make sure to pay these bills on time. You
also must not have too many of these accounts, as any payment on them
is going to reduce the amount of money you can apply towards a new
mortgage payment, and you won't be able to buy as much home.
Cash - Another
factor to determine how much home you can afford is the amount of cash
you have to apply towards closing costs, and/or a down payment.
You can get a lower interest rate by putting a larger down
payment on a home, and if it is more than 20%, you will avoid paying
Private Mortgage Insurance (PMI). You can also pay for
closing costs, which will reduce the overall loan amount. You
can also buy down the interest rate if you have cash, which will reduce
the monthly mortgage payment, and allow you to buy more home.
If buying a condominium, townhouse, or single family home in a
cummunity with a homeowner's association, those monthly fees will also
reduce the total amount you can afford on your monthly mortgage
payment. If you own your own business, how much income you
declare on your tax return is what will determine how much home your
lender feels you can afford. Stated income loans have pretty
much gone away, and lenders want to see at least two year's of tax
returns for your business, a profit and loss statement for the current
year, as well as other documents.
One final thing to remember is that you don't need to accept how much
the lender says you can afford when it comes to buying a home.
You need to make sure you are comfortable with the loan
amount and the monthly payments. So, how much home can you afford to
buy in Chandler depends on your income, credit score and
credit history, the amount of cash you have, and how much you are
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