When you look forward to calculating the general affordability range, you should consider a few primary items. It would be inclusive of monthly debts, household income, and savings for down payment. Therefore, as a homeowner, you should understand the importance of having a specific level of convenience in understanding your monthly mortgage payments.
Despite your monthly debts and household income has been relatively stable, your overall savings along with how much you look forward to allocate towards your home could largely differ based on how much you wish to set aside for emergencies. It should also be inclusive of how much you look forward to keeping aside for future expenditure.
The Best Mortgage Company lays emphasis on the importance of keeping reserve at least three months of housing payments inclusive of your monthly expenses. It would enable you to have additional amount in hand provided something comes up unexpectedly.
Factors determining how much house could be afforded
In order to determine how much house you could afford, it would be pertinent that you should not exceed your monthly expenses by 36% of the total household income. It would be pertinent to mention here that the 36% rule has been based on dividing your monthly mortgage payments along with other monthly debts by the gross monthly income.
Major aspects to calculate affordability aspects would be:
- Monthly income
Regular income received on monthly basis would determine the baseline of affordable monthly payable amount.
- Funds available for cover down payment along with closing cost
It would be the available amount to put down along with covering the closing costs.
- Monthly expenses
You should take considerations of your monthly expenses and other obligations.
- Credit report
The amount of debt along with credit score would influence how the lender views you as a borrower.
These aspects would help the Best Mortgage Company determine the amount you could borrow along with the rate of interest you would be charged.