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Finding an affordable mortgage loan

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your one stop shop for affordable mortgage

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									Mortgage Loans - How To Get Affordable Ones

Finding an affordable mortgage loan comes with many options. Lenders literally compete for
potential new homeowner business. Now lenders have another tool, the internet. Lenders can
now reach out to those looking for affordable mortgage loans through saturation e-mails, e-mails
that go out to a blanket buyer list, and online websites offering the best possible rates.

The lenders today include savings and loans, commercial banks, mortgage bankers, mortgage
brokers, and credit unions. Individual home owners have even gotten into the act with websites
that showcase the terms they are willing to offer. These secondary websites are growing every
year allowing homeowners to cut out the middle man all together. All of these things make it
easier for the person looking to purchase a home find that perfect mortgage.

These are the steps to determine how much you can afford:

1. Determine your monthly gross income (before taxes).

2. Multiply this amount by 0.28. This is your maximum monthly housing expense. (Lenders allow
28% of monthly gross income for housing expenses. This is also known as the front end ratio.)

3. Now multiply your monthly gross income by 0.36. This is the allowance for your long-term
monthly expenses. (Many lenders allow 36% of monthly income to go toward long term debt
that can't be paid off in 10 months.)

4. Add up your monthly long-term obligations including child support, auto loans, credit cards,
and other payments that can't be paid off in 10 months.

5. Subtract the total of those obligations from your long-term monthly expenses in step 3. This is
your monthly housing expense. (This number is used for the back end ratio, or debt to income
ratio, to make sure your total debt does not exceed 36% of your monthly income.)

6. Compare the maximum monthly housing expense from step 2 and your monthly housing
expense from step 5 and take the smaller of the two. This is the amount you can afford each
month for payment of principal, interest, taxes, and insurance - also called PITI.

The length of the mortgage and interest rates will affect the total dollar amount of the loan, so
talking with a lender will give a big picture view of what you can afford. Getting pre-approved for
a mortgage will take the guesswork out of deciding a price range for a potential house and
reduce stress in the home-buying process.

For more information and tips on this topic, you may visit: http://offto.net/oy6e5v/

								
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