Most financial advisers agree that people should not spend more than 28 percent of their total income when determining the amount that can be paid to buy a home, the so-called "affordability of mortgages," according to experts at Bank Rit Financial Consultancy .
If the monthly income of individuals is $ 5,000 per month, mortgage payments should not exceed $ 1,400 per month.
According to the company, financial experts are advised not to pay more than 28 percent of the mortgage, but the total debt (including mortgage and other debt, such as car or student loan payments) will not exceed 36 percent of income, 36 used by lenders.
There are many factors that are included in the lender's decision to grant mortgages, including the private credit score, the debt-to-income ratio (the percentage of total monthly obligations against the monthly salary), the date of employment, For the client, use the rest to determine how much you can afford.
To calculate your overall affordability, some key elements, such as income, monthly debt (for example, car loan, other loan payments, and credit cards) are considered, and the amount of savings available for the down payment.
Although monthly income and debt may be relatively stable, the total savings and the amount you would like to allocate to your home can play a role. A good rule is to provide three months of home payments, including down payment and monthly expenses , Giving traders an opportunity in the event of some unexpected events.
The main factors in the calculation of affordability are the income and money available to cover the first installment and closing costs, as well as monthly expenses and the profile of the credit score. Income is the money received on a regular basis, such as salary or income from investments, While available funds are the amount of money available to cover costs, savings can be used within this framework, while at the same time affecting your credit score and the amount of debt owed to you, in the lender's view. These factors help you determine how much money you can borrow and what interest rate you will be charged for.
Getting mortgage approval is an important step in determining the amount of home loan you can afford, and during this process the lender will assess your funds to determine how much they can finance. But knowing that qualifying for a certain amount does not necessarily mean that you can afford it. Qualifications do not include personal savings or spending habits. The lender's assessment is important, but ultimately the decision is the borrower's. In this context, it should be emphasized that the objectives of personal savings or spending habits have a significant impact on affordability.
It is important to note that the interest rate you receive can make a big difference to the amount of home loan you can afford, because lower interest rates can significantly reduce your monthly mortgage payments, and also be aware that the benefits that are marketed are fixed for a period Are short at the beginning of the loan only, and fees that make up a large part of the expenses should be given great importance and should be included in the budget.
Interest rate can
Makes a big difference in
The amount of the home loan
Which can afford.