Deciding how much house you can afford
Your lender decides what you can borrow but you decide what you can afford. Lenders are careful, but they make qualification decisions based on averages and formulas. They won't understand the nuances of your lifestyle and spending patterns quite as well as you do. So, leave a little room for the unexpected - for all the new opportunities your home will give you to spend money, from furnishings, to landscaping, to repairs.
Historically, banks use a ratio called 28/36 to decide how much borrowers could borrow. An approved housing payment couldn't be more than 28 percent of the buyer's gross monthly income, and his or her total debt load, including car payments, student loans, and credit card payments, couldn't be more than 36 percent. (In Canada lenders apply similar formulas to determine how much a buyer can afford. The Gross Debt Service ratio, or GDS, is not to exceed 32 percent of the buyer's gross monthly income, and the Total Debt Service ratio, or TDS, is not to exceed 40 percent of the buyer's total debt load.) As home prices have risen, some lenders have responded by stretching these ratios to as high as 50 percent. No matter how expensive your market though, we urge you to think carefully before stretching your budget quite so much.
Deciding how much you can afford should involve some careful attention to how your financial profile will change in the upcoming years. In the long run, your own peace of mind and security will matter most.
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Deciding How Much House You Can Afford
How Much Can You Borrow For A Home
Written by Mary Ellen Vanaken Posted On Monday, 02 May 2016 10:56
Mary Ellen Vanaken
Retaining the services of The Mary Ellen Vanaken Team of North Atlanta entitle you to a network of professional individuals that are committed to helping you. Whether your goal is to buy a dream home in North Atlanta, Invest in North Atlanta Real Estate, or SELL your property in North Atlanta. The Mary Ellen Vanaken Team is a team with one common purpose – to get to the closing table.
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Mary Ellen Vanaken, Team Owner, is a seasoned professional in both Real Estate and Business. Mary Ellen has an outgoing personality and is known to be aggressive in marketing real estate. With her background in accounting and finance, her goal is to help you find the best value your money can buy.
Administrative Staff – The Mary Ellen Vanaken Team does not allow its skilled sales staff to be busy with administrative tasks. We understand that an outstanding Real Estate Agent may not be an outstanding administrator, so we allow each to do what they do best. This benefits you by freeing up your agent to specialize in negotiations and your admin to dot the I’s and cross the T’s during the transaction.
Your Agent – The Mary Ellen Vanaken Team is comprised of niches (real estate areas) Training, certifications, conferences and on the job experience is required for our agents who specialize in these areas:
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The Mary Ellen Vanaken Team believes that a home is not a home because of its room dimensions or the color of the walls. It is about how you feel when you walk though the front door. And the way you can instantly envision your life unfolding there. This is about more than real estate. It is about your life and your dreams.
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