What Can I Afford?
Buying a home may seem so far away. You would love to have your own backyard to grill and enjoy a nice cold beer or a spacious kitchen to cook for your friends and family, but homes are just to expensive!
If you want a home but think you can’t afford it or are just unsure, here are what factors into it and what you loan officer will go over with you when you sit down with them. Maybe it is a year or two away, but more often than not people are a lot closer than they think.
Obviously one of the major factors is how much money you bring in. Household income certainly isn’t the only factor, and even if you have less than optimal income there are ways to make homes affordable that don’t just involve making more money.
When you sit down with a loan officer and get pre-approved they will pull your credit. The better it is, the better the interest rate you will receive and the less you will pay.
Minimum monthly debt obligations
This is just a fancy way of saying how much your monthly debt payments are. Count auto payments, credit card payments, student loan payments, and loan payments and add them all together. The higher that number is the less a lender will let you borrow.
The more money you can put down, the less you have to borrow and the lower your monthly payment will be. The minimum down payment can be as low as 3% so even if you don’t have a 20% down payment there are plenty of programs out there that allow considerably less than that.