03/10/2022
How do mortgage lenders help ensure buyers don’t get in over their heads? They carefully look at income & current debts when determining the size of the mortgage.
The three main things to consider:
👉🏻Income, debt and expenses
-As a rule of thumb, “No more than 30% to 32% of your gross annual income should go to ‘mortgage expenses.'” This includes principal, interest, heating costs and property taxes (plus fees for condominium maintenance).
-Depending on the lender, your total debt payments shouldn’t exceed 37% to 40% of your gross annual income.
👉🏻Getting your numbers in shape
If you’re falling outside the ratio benchmarks, don’t lose hope. Now is the time to review your budget, debt, and other expenses so that you can comfortably afford your new home
👉🏻Understanding carrying cost
-As you plan for home ownership, it’s important to understand any other ongoing costs (the “carrying cost”) you will need to cover.
🔹The checklist in the second photo will allow you to visually see and calculate what ongoing costs may look like. You may also want to add additional expenses like grocery, transportation, internet and ranking them in order of necessity.
📩Email or DM me for more information
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