How Much Of A House Payment Can I Afford
Are you curious on how much you can actually afford for a house payment? Regardless if you are buying or refinancing, serious consideration must be devoted to coming up with the right answer. What may be affordable in one market may not apply in another market. You should always consult with a local representative within the metro area you are considering.
Many different factors weigh into your decision of how much of a house payment you can afford. Find USA Real Estate Agent! Contact a local Real Estate professional for assistance with how much of a house payment can I afford.
Affordability Factors:
- Debt To Income Ratio
- Consumer Debt
- Interest Rates
- Gross Monthly Income
Different mortgage programs have their own math calculations referred to as Debt-To-Income ratios. Sub-prime mortgages use the most generous ratios typically at 50%. This indicates that a maximum of 50% of your gross monthly income can be used to meet all of your monthly financial obligations, including the principle, interest, taxes and insurance for the mortgage.
For an individual with a $5,000 monthly income, the starting point would be $2,500. Lets’ say for example that you have auto loan and credit card payments totaling $500. Within the 50% D-T-I ratio, the remaining balance of $2,000 would be the maximum allowed total housing expense. Using round numbers, a $100,000 loan for 30 years at 6% interest would have a principle and interest payment of $599.55. If the monthly property taxes and insurance equaled 6% of the property value ($500) then your total housing expense would be $1099.55. All of the figures used here are for illustrative purposes only. Property tax rates, hazard insurance rates, loan amounts and interest rates vary from city to city, county to county, state to state. Always consult with a local Real Estate professional in the metropolitan area which you are considering.
Many different factors weigh into your decision of how much of a house payment you can afford. Find USA Real Estate Agent! Contact a local Real Estate professional for assistance with how much of a house payment can I afford.
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