Most of us want to buy a property sooner or later; it is one of our most common life goals. Some of us succeed in it, while others do not. It all depends on out financial ability and patience. If you can afford a home on your own, fantastic, choose the perfect one and go for it. If you cannot, apply for a home loan. Remember, you need to be patient, as repaying it usually takes at least a couple of decades.
There is one thing borrowers ask about their mortgage budget – how much house can I afford? Having an answer to this question is crucial. You need to know how much money you have available for the purchase, so you know what to look for. It is helpful in narrowing down your options.
It is not very difficult to find this out, either on your own or with the help of mortgage broker. If you need assistance, Moreira Team Four Square will gladly provide you with professional home loan advice. If you do not think contacting a mortgage expert is necessary, you can follow several steps to get an estimate of what you can afford with a little leg work.
The first thing you should do is determine your total income. Take into account all regular earnings that come from all sources, and add them up. After this calculation, the next step is to add up all your usual expenses, such as utility cost, credit card bills, other debts, expected income tax, insurance, allowances, food expenses, household supplies, and your desired monthly savings.
When this is finished, calculate your debt-to-income ratio. It is the percentage of your earnings that goes toward paying debts. Lenders use this information when determining the amount of mortgage loan you can qualify for. The typical value of this ratio is 36%. If your outcome is less than or equal to this number, you will most likely qualify for a home loan.
Multiply this number with your income, and the result will tell you how much money you can spend for your debts in total. Deduct this sum from your regular expenses and the difference between them will be the maximum possible mortgage payment you will be able to make monthly.
If you want to know how much your principal amount will be, just multiply the mortgage payment with the number of years you want to take out a home loan for. It is crucial to know how much house you can afford, so you find the right mortgage loan option. Your choice of properties also depends on your buying ability. You need to be aware of your budget before starting to look for the home of your dreams.
Do not purchase a home out of your price range, as it can lead to potential financial troubles in the future. Be prepared, in most cases, you will need to pay a down payment before taking out a mortgage. Make sure you have enough money saved up before visiting a home loan provider. Consider all your options, and choose the most suitable one.