Buying your own home is an exciting endeavor, however it does come at an expensive cost. When you begin the initial steps to buy a home, you will need to determine the amount of mortgage that you will need in order to pay for the home, and its cost is based on several factors. If you are interested in obtaining a mortgage to buy a home in Knoxville, Maryville, Lenoir City, Oak Ridge, or Gatlinburg, Tennessee, and want to know more about your financing options, Foundation Mortgage can help. Read on to learn more about determining the mortgage amount that works best for your situation.
Factors to Think About When Obtaining a Mortgage
There are many factors to consider when figuring out the amount of mortgage you will be able to afford when you finance your home. You will first need to analyze your monthly income and add up any investments that you have outside of that amount. Be sure to include any money you have earned from other property rentals, stocks and bonds, etc. You also should review the amount of debt that you owe and the amount that you are required to pay back each month, including car payments, student loans, credit card debt, etc. Next, you will want to estimate the amount that you will be able to pay for the down payment, and set aside funds for closing costs, interest rates, taxes, and mortgage insurance. It is advisable to have saved up for the cost of at least three mortgage payments just in case any unexpected costs arise.
Calculating the Amount You Can Afford For a Mortgage
A common guideline to follow when you are attempting to determine the amount of mortgage you can afford is to try not to spend more than 36 percent on monthly debt, and to spend no more than 28 percent of your monthly income on housing costs. Your debt-to-income ratio, (DTI), is a measurement that compares your monthly income to your monthly debt, and if you have a lower DTI, you will be more likely to be eligible for a mortgage that has a better rate and term. Conversely, if you have a higher DTI, it will be more challenging to get a mortgage, and your rates will likely be higher. Therefore, you will want to pay off as much debt as you can before applying for a mortgage in order to qualify for the best mortgage rates.
Getting Help With Your Mortgage
There are many factors you must consider when you decide to become a homeowner and are trying to figure out how much you should spend on a home. If you are interested in buying a home in Knoxville, Maryville, Lenoir City, Oak Ridge, or Gatlinburg, Tennessee, and need help understanding your financing options, contact Foundation Mortgage today for a consultation.