How much home can you afford?

Experts say you will typically spend about a third of your income on financing your home. Before you start to look for your dream house, you should figure out just how much of that dream you can afford.

Mortgage lenders look at your ability to repay the mortgage loan by reviewing:

• Your credit history
• Your monthly gross income
• How much cash you can accumulate for a down payment, which is usually 10 percent to 20 percent of the sale price.

Most people have a general idea of how much they feel comfortable spending. It's equally important to know how much your lender calculates you can afford. By getting pre-approved, it will save you a lot of time when searching for a home, and will also take a lot of the guess work out of the question “Can we afford this home?”

Know how much you can afford in monthly payments. Lenders factor in sales price and down payment, but place more importance on how much you can handle your monthly expenses.

Evaluate your financial situation as the lenders do. Typically, your total monthly housing costs should not exceed 32% percent of your gross monthly income. Or, housing costs plus any outstanding monthly long term debt (car loans, credit card balances, etc.) should not exceed 40% percent of gross monthly income.

Ask how your lender determines the total monthly housing cost figure. It usually includes your mortgage principal and interest payments, property taxes and hazard insurance.

Determine how much your financial institution is willing to lend you by completing our Mortgage Calculator or CLICK HERE for help with the pre-qualification process.

Become a pre-approved buyer. Pre-approval gives you more buying strength since the lender makes a credit decision and pre-approves you for a certain mortgage amount. You'll know what price range your lender will approve - and you'll be in a position to make an offer as soon as you find the right home.

If you have any questions regarding Real Estate in Southern Utah, or Real Estate in St. George Utah, Ivins Utah, Santa Clara Utah, Hurricane Utah or Washington Utah, please feel free to call us at 435-862-3303 or e-mail us @ HotHomesofSTG@aol.com