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How Much Home Loan Can I Afford?
Have you ever asked yourself how much home loan can I afford?
If you know how much of a payment you qualify for before shopping
for a home, your purchase will go much smoother and it can save
you a lot of headaches.
How would you like to find the perfect place to live then not
know if you can qualify for the loan? Long before you even start
looking for your home, you need to know how much home loan you
can afford.
Many factors are involved to qualify for a loan. Each lender
has different guidelines and there are a multitude of different
types of mortgage loans.
Jumbo mortgage loans will be harder to qualify for than a
conforming mortgage loan. Other factors like down payment, loan
amount and what is considered a good credit score will also make
a difference.
There are some general guidelines lenders use that will help
answer your question, how much home loan can I afford? These are
only rough estimates, but you can get a good idea if you will
qualify for a home loan and how much of a monthly payment you can
afford.
1. Your mortgage payment, taxes, home owners insurance and any
other fixed housing expense should be between 25% and 28% of your
total gross (before taxes) monthly household income.
2. Your monthly housing costs (the total figure above) plus
any other long term debt (monthly expenses extending longer than
11 months) such as car or boat loans, credit cards or installment
loans should not exceed more than 40% of your gross (before
taxes) monthly household income.
These figures can get higher if you have a higher credit score
because you are a better risk to a lender and are more likely to
pass their home loan guidelines.
What is considered a good credit score to a lender usually
starts with a score of 680 and above. Lenders vary but a 680
score and above means you will likely get the very best interest
rates and terms on your loan.
Lenders use the three major credit bureaus; Experian, Trans
Union and Equifax to get an average credit score for you. It's a
good idea to check your credit reports from all three major
credit bureaus before you qualify for a home loan.
That way if you find any mistakes, you can clear them up
before a lender sees your credit report. Once you get your credit
report check carefully to see that everything is accurate.
If you find any errors, dispute it immediately with the three
major credit bureaus. It takes time to get the errors off of your
credit report. If you have a clear credit report before you apply
for a loan you are more likely to have a pleasant experience
instead of a nightmare.
The best way to know if you will qualify for a home loan is
talk with a mortgage professional. This is what they are trained
to do and they can give you much more accurate figures so there
are no surprises when you go to make an offer.
So now when you are ready to qualify for a loan you'll know
exactly how much home loan you can afford.
Copyright © 2005 Credit Repair Facts.com All Rights
Reserved.
This article is supplied by http://www.credit-repair-facts.com
where you will find credit information, debt elimination programs
and informative facts that give you the knowledge to correct your
own credit and credit report. For more credit related articles
like these go to: http://www.credit-repair-facts.com/articles_1.html
 MORE RESOURCES updated Thu. February / 09 / 2012
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