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Home / Videos / Buying a Home / How Much Can You Afford to Pay for a Home?

How Much Can You Afford to Pay for a Home?

November 21, 2016 By Admin

How Much Can You Afford to Pay for a Home?Answering the question, “How much home I can afford?” is not easy, because the answer varies from person to person.

So in this video, Mary Catchur gives an overview of what you should consider when determining how much to spend for a home.

She explains the debt-to-income ratio in easy to understand terms, and also talks about feeling comfortable with your monthly mortgage payment.

Video

Video Transcript

Hello, I’m Mary Catchur. I’m the owner of Marimark Mortgage. One of the questions I get asked all the time is, “Is there some easy way to determine how much home I can afford, like maybe some multiple of earnings?”

Determining How Much You Can Afford to Spend on a Home

That’s not really an easy question to answer, because it’s going to vary by person. It’s going to depend in large part on what your expenses are also, not just your income. Because one of the first things the lender is going to look at is, “What is your debt-to-income ratio?” And to determine that, they’re going to look at all of your expenses that you’re obligated on a monthly basis based on your credit report, and any other obligations you have that might not even appear on your credit report. They’re going to divide that by your monthly gross income and determine your debt-to-income ratio.

Are You Comfortable with the Monthly Mortgage Payment?

However, one of the things I always talk to borrowers beyond that is you may qualify for a particular loan product based on that debt-to-income ratio, but are you comfortable with the mortgage payment on that home? So one of the first things I’ll ask people is, “What are you currently spending on your rent or your current mortgage? And, and what are you comfortable spending?” Because you may be more limited by that monthly payment amount, than you are but the debt-to-income ratio.

The other thing that may limit you is, “How much cash do you want to put down, or how much cash do you have available to put down?” If you only have a limited amount of cash, sometimes you can do loan products with just a small amount of cash but you may be in a better position if you put down a higher percentage. So then we look at the options of putting down less money versus putting down more money. You may find that you’re more comfortable with a lower priced home that allows you to put down more money, and then reduce your mortgage payment. Or, possibly even eliminate mortgage insurance, if you put down 20%.

The Answer is Not Simple

So, as you can see, the answer is not simple. But if you have a good lender that you can talk to and go through the various scenarios, they will help you determine really the best price point for you. At Marimark Mortgage, we’re always available to assist borrowers to do this at no cost. Visit us online at MarimarkMortgage.com, or give us a call at 866-910-8020.

Thank you.

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Filed Under: Buying a Home Tagged With: buying a home

Opinions, estimates, forecasts and other views contained in this page do not necessarily represent the views of Marimark Mortgage or its management and should not be construed as an offer to provide financing at the rates or terms mentioned. Due to market fluctuations, interest rates are subject to change at any time and without notice. Interest rates are also subject to credit and property approval. Although Marimark Mortgage attempts to provide reliable, useful information, it does not guarantee that the information is accurate, current or suitable for any particular purpose. Information from this page may be used with proper attribution.

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