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Can I Afford This Mortgage?

The iServe Blog

Can I Afford This Mortgage?

Jan 26
Category | The iServe Blog

When you begin shopping for a home, you may be approved for an amount that seems much higher than you expected. However, just because you can get approved for a loan on a particular home you may still wonder “how much can I afford?” There are many things that you need to consider before you purchase a home and wind up getting in over your head. Luckily, you have access to our mortgage affordability calculator that can help you calculate these amounts and purchase a home that will serve you well and not become a financial burden.

Use the Calculator for Basic Guidance

Before you begin shopping for a new home, you need to have a clear idea of what you can pay each month. Some of the important things that you must keep in mind are your monthly household income, current debts and how much your monthly house payment would be. You must also think about how much you will have for the down payment (if your loan type requires you put down money up front) and the interest rate of the loan.

Your Home Costs Include More than Your Mortgage

Remember that you will be paying more for your home than just the mortgage payment. Think about the costs of taxes, homeowner’s insurance and private mortgage insurance (if that is required.) One way to make sure you do not miss anything is to compare your front and back ratios. The “front ratio” is the percent of your gross income related to housing expenses (including all taxes and insurance). The “back ratio” is the percentage of gross income needed to cover housing and other routine monthly expense.

Think About Your Unique Situation

While our loan calculator is a great tool, it is not designed perfectly for every scenario. Look at your unique needs and make sure you are not putting yourself in a situation that these requirements will not be met. For example, families with several children may have more significant childcare and educational expenses. Additionally, if you are self-employed, you may have a larger-than-average tax burden. Thinking about each of these exceptions will help you as you make this huge decision.

If you have any questions about mortgage affordability and choosing a mortgage that will serve you well without unduly stressing out you and your family, reach out to us at iServe Residential Lending. Our team of residential lending officers will help you make these calculations and determine exactly what you should be looking for from a financial standpoint when you are buying a home. Call us today; we cannot wait to help you make your home ownership dreams come true.