Determine The True Affordability Of Your New Mortgage

In general LENDERs will want to keep your payment to less than 35% of you total gross income. This is based on the fact that over many years LENDERs have figured out the odds of you getting foreclosed on simply by the the debt to income ratio.

MORTGAGE LENDERs also take into consideration the fact that you have other debts and want to keep your MORTGAGE plus other liabilities under 45%. There are other expenses that LENDERs do not take into account and that is simply because your ratio has some room to reach 100%. Its advisable that you take an honest look at your finances prior to getting a MORTGAGE.

Will you absolute be fine at the end of the month with additional expenses such as child care, cable tv , groceries , cell phones. Its very important to creat a tally and see how much MONEY you will have at the end of each month. Have you considered emergency expenses, helping out a friend or flying out for a relatives funeral.

Once you have considered all the additional expenses you should write down a figure that you will be happy with each month and won't leave you stressed out. If you find your self stretching too far than consider not buying at this time or reduce the purchase price to 20% less than what you are qualified for.

Do you really need 3 bedrooms and 1800 square feet? The beauty of Real Estate is that after a period of decline you will have may have an increase prices and EQUITY. You could always add a room and update a smaller home. A lot of times this could mean a small profit for the homeowner due to the exponential increase in value that certain upgrades provide.