| Home | Free Articles for Your Site | Submit an Article | Advertise | Link to Us | Search | Contact Us | |
Custom Search
|
Article Surfing ArchiveHow Much Mortgage Can I Afford? - Articles SurfingShopping for a home can be an exciting time in one's life. There are so many things to consider; how many rooms, how many bathrooms, the neighborhood and the school district. However, perhaps the most important consideration is how much house one can afford. The general rule of thumb is that most homeowners can afford a mortgage loan that is 2-2.5 times their gross income. This means a family with a household income of $100,000 could probably afford a $200,000-$250,000 home. Of course this is generalization. There are other factors to take into consideration. When lenders are considering potential buyers they look at more than just their gross income. They also look very closely at the buyer's front-end and back-end ratios, as well as the amount of the down payment they can afford. We will take a closer look at what these factors are and why they are important. 1. Front-end ratio: The front-end ratio is the percentage of ones' gross income that will go towards the monthly mortgage payment. The mortgage consists of principle, interest, taxes and insurance. Most lenders don't want to see the front-end ratio higher than 28%. This means that the mortgage payment should not exceed 28% of ones' monthly income. 2. Back-end ratio: The back-end ratio is the percentage of ones' gross income that is required to cover debts. This includes the mortgage, credit card payments, child support and the like. Most mortgage companies would like to see this ratio stay below 36% of ones' gross income. 3. Down payment: Lenders would like to see a down payment of at least 20%. A down payment of this amount will allow the buyer to skip out on paying expensive mortgage insurance. Purchasing a home can be a very satisfying experience. It is a life-long dream for many and a great accomplishment. However, it can also be expensive, so ones' total financial situation must be taken into consideration. One must not only consider ones income, but also expenses, debt, lifestyle and personality. Only after these things are carefully and completely considered is one ready to purchase a home.
RELATED SITES
Copyright © 1995 - Photius Coutsoukis (All Rights Reserved). |
ARTICLE CATEGORIES
Aging Arts and Crafts Auto and Trucks Automotive Business Business and Finance Cancer Survival Career Classifieds Computers and Internet Computers and Technology Cooking Culture Education Education #2 Entertainment Etiquette Family Finances Food and Drink Food and Drink B Gadgets and Gizmos Gardening Health Hobbies Home Improvement Home Management Humor Internet Jobs Kids and Teens Learning Languages Leadership Legal Legal B Marketing Marketing B Medical Business Medicines and Remedies Music and Movies Online Business Opinions Parenting Parenting B Pets Pets and Animals Poetry Politics Politics and Government Real Estate Recreation Recreation and Sports Science Self Help Self Improvement Short Stories Site Promotion Society Sports Travel and Leisure Travel Part B Web Development Wellness, Fitness and Diet World Affairs Writing Writing B |