[Finding the right house] [Home inspection] [How much house can I afford] [Moving Company advice] [Time for the big Move]

HOW MUCH HOUSE CAN I AFFORD?

Determining how much you can afford in a house payment plays a large role in all the decisions that go to selecting your future home. Your payment can affect everything from neighborhoods where you look, to the size of the house, or even the type of financing you choose.

KEY RATIOS

Your DEBIT-TO-INCOME ratio is one key in determining what payment you can afford in a lender's eyes. As a general rule your monthly debts (car payment, credit cards, school loan), any reoccurring debit with more than 3 months left to pay is totaled as one amount. That amount should not exceed 36% of your gross monthly income. There are some FHA loans that allow a slightly higher % of debit.

HOUSING EXPENSE RATIO

Usually banks want your mortgage payment to total no more than 28% of your gross monthly income. Sometimes that rule can be stretched if you are making a large down payment. With a 20% down payment some lenders will qualify a borrower up to a 33% Housing Expense Ratio. Ratios higher than these will make it difficult to obtain a loan.

LOAN PREQUALIFICATION vs. PREAPPROVAL

You can have your lender or real estate agent help prequalify you for a loan. Prequalification is just an estimate of what payment you will be able to afford. Preapproval is a full formal process where the lender examines your finances and agrees in advance to loan you money up to a specified amount.

REVIEW OF IMPORTANT FACTORS to LENDERS

• your gross monthly income
• your outstanding debts and monthly obligation
• your credit history
• your savings and/or cash on hand (money available for down payment and closing cost) choice of mortgage type and current interest rate

FACTORS THAT COULD HELP YOU BUY MORE HOUSE

GIFTS: many lenders allow gift funds for part of the down payment and/or closing cost. A "Gift Letter" stating that this is a gift that does not have to be repaid is required.

Closing Cost: some sellers on certain terms may agree to pay all or part of your closing cost. This is achieved through negotiation with the seller and may not be something the Seller agrees to do. This is an area where you should seek advice from your real estate agent.

LOAN TYPES AND SPECIAL PROGRAMS:

There are special loan programs available designed to help first-time Homebuyers. These programs have special guidelines so check with the North Carolina Housing Finance Agency to see if there is a program that helps you or talk to your real estate agent.

If you have questions about the loan process, e-mail me at loan@julieparrishrealty.com.
or visit understanding credit reports.

__________________________________________________________ Home When you are ready read Moving.

Stop moving my house around. But if you must, see below "Moving Your Pet".

Moving! New cats! Where is my dish?

My Moving List and do not lose me.

• buried bone
• newspaper
• trash can