What Can You Afford?
Before you begin the search for your dream home, you should determine how much you can comfortably spend. Doing this will enable you to limit your search to those properties that you can realistically afford. Mortgage lenders take the following factors into consideration:
There are three main credit-reporting agencies that will provide current credit reports.
- The amount of your proposed down payment (its percentage of the selling price)
- Your employment stability
- Outstanding debts
- Credit references and payment history.
Experian - 1-888-397-3742
Equifax - 1-800-997-2493
Trans Union - 1-216-779-2378
Lenders usually use the following two qualifying guidelines to decide how much of a loan you can manage:
Your monthly housing expenses - mortgage payment, property taxes, insurance, etc. These expenses should be no more than 28 percent of your monthly gross income.
Your monthly living expenses and any long-term debts - utilities, car and school loans, child support, health and car insurance, etc. These expenses should be no more than 36 percent of your monthly gross income.