Choosing a Mortgage Your Budget Can Afford

Home Loans

Choosing a Mortgage Your Budget Can Afford
(presented by www.refinance-refinance.net - mortgage lenders)

By Louie Latour

If you are a potential homeowner in the market for a mortgage, knowing how much you can afford will keep you out of financial hot water. Planning your home purchase will help you avoid being turned down when applying for a mortgage loan. Here are several tips to help you determine exactly how much mortgage you can afford.

Understanding Your Debt-to-Income Ratio

Mortgage companies use your debt-to-income ratio to determine how much you can afford. This ratio expresses your monthly income and your debts as a percentage. Mortgage lenders typically do not want your mortgage payment to be greater than 33% of your monthly income amount. When your other bills are factored into the equation your total monthly obligation should not be greater than 38% of your monthly income.

How to Calculate Your Debt-to-Income Ratio

When calculating your debt-to-income ratio it is important to only use income you can document. This means you need pay stubs and w-2s to document your income. The simplest way to calculate your debt to income ratio is by taking the amount on your w

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