5. How do I know how much I can afford when buying a house?
(Please excuse grammatical mistakes - this is a direct transcription of the original video.)
Number five, how do I know how much I can afford?
Well, that's kind of like the whole point of a loan officer, right? So you got speak to a loan officer first. But if you must avoid speaking to one of us, you can do quick math.
You have to consider the monthly debts on the credit report and divide it by your monthly income.
What makes a monthly debt? Well credit cards, car payments, car notes, student loans.
Maybe you bought some furniture from a furniture store and you financed it. Something from Conn's. Light bills, phone bills, electricity bills. - those don't count because they're not considered debts. They're services that you're paying for on a monthly basis, and can get cut off any time. We're talking about debts that you owe that you must pay back. Money owed to the IRS, child support - yeah, you better pay your baby mama. You're allowed about 40% total. So if you take your monthly debt and it's 20%, that means you can use about 20% of your monthly income towards a monthly mortgage payment. If your monthly debt is 30%, then you have about 10% of your monthly income in order to use towards your mortgage.
If you have 0% monthly debt, then you can use up to 30%, not 40%, but 30%. Okay. That's the maximum that they'll allow you for the most part. It can be tweaked a little bit, but 30% is a good rule of thumb. If your monthly debts is 40% and you don't even have a mortgage payment on it, you're not buying a house. You have to remember to add monthly taxes, monthly insurance and HOA, if there's any.
It's funny when people ask me this question, when I go, "Well, let's find out." And they're like, "Well, what do you mean?" It's like, "Well, I need your application." And they're like, "Well, can't you just tell me?" No. And there's also all sorts of nuances and things that we have to look at. So even though you might be a math genius, there might be things that you don't understand that should be considered.
When I look at credit or tax returns, there's things that you might think might be different from what, the way the underwriters look at it. So there might be details about your income, or your credit, whatever that you might think is one way, but the underwriter looks at it another way.
Also if you want to set up a ZOOM CALL or PHONE CALL to learn more about this particular topic, you can do so by setting an appointment with First Time Home Buyer Coach Larry Le here: www.homeloandate.com.
If you want to start the home buying process you can follow any of these options:
- Call/Text Loan Officer Larry Le right away at 214-225-6323
- Email Loan Officer Larry Le at [email protected]
- Start the preapproval process on your own - you can start at www.LarryLeTeam.com or https://larryle.floify.com/apply-now
- Set an appointment to speak to Loan Officer Larry Le on the phone or via ZOOM at www.homeloandate.com
Also you can check out Loan Officer Larry Le's blog at http://yourmortgageinsider.com for information, news, and updates on the mortgage and housing industry or check out his YouTube channel at https://www.youtube.com/channel/UCYYE06pvAn0lG7proyLIUqQ.
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