Knowing how much house one can afford is a critical question for prospective homeowners. Many interested buyers have no idea what size home mortgage they qualify for, so they end up trying to take out the largest loan a broker or lender will approve. This approach to acquiring a home mortgage is not necessarily the wisest option. A trusted mortgage company will go beyond the formula of simply determining someone’s basic eligibility and actually take into consideration the security of the homeowner’s financial future. It is important for prospective homeowners to employ a reliable and trustworthy mortgage broker that will explain how home mortgage eligibility is determined and lock in the best possible mortgage rates.
When assessing whether an individual qualifies for a home mortgage many things are taken into consideration. Typically, a monthly mortgage payment should remain under 45 percent of one’s gross income. Some mortgage companies will approve loans ranging from 45 to 55 percent of the individual’s gross income if they have a good credit history. However, it is critical that homeowners understand that they will actually be making their home mortgage payments out of their net income. Other expenses, such as taxes, car payments, credit cards and other loan payments must be considered when deciding what size home mortgage is truly affordable.
The debt-to-income ratio is another factor that is taken into consideration when determining eligibility. Brokers like to see that the debt-to-income ratio does not surpass 45% of gross income. A mortgage broker can help homeowners calculate where they stand financially in order to determine what is the most feasible loan option. Mortgage companies are just like any other business; they have to make money to survive. In order to make money they charge interest on the amount they lend. A reputable mortgage broker will provide fair and competitive interest rates and work to secure a home mortgage that positions their client toward financial stability and retirement.
Many individuals cringe at the thought of their credit score, and yes, a broker will look at an individuals credit history; whether the borrower has credit cards maxed out, bankruptcy, late payments, extreme monthly payments, or collections. Each of these factors is important when determining home mortgage eligibility, but there are many options available for those with a less than excellent credit history. Loan programs are available for individuals with a wide range of credit histories and financial situations.
Before even beginning to search for a new home, a vacation home, or an investment property, an honest mortgage company should be consulted. They can help buyers understand their financial situation and just how much house they can afford. By seeking the guidance and advice of a mortgage broker, a prospective buyer can secure a home mortgage that is tailored specifically to their financial situation. Purchasing a home is a large investment and the importance of locking in the right home mortgage from a trusted mortgage company cannot be overstated. Additionally, the house-hunting process should be exciting and enjoyable! Being well prepared, educated and working with the right mortgage broker will ensure the best investment is made.