The first and most important factor to consider when buying a house is, quite simply, whether you can afford it. Is your income rising, remaining stable or is it decreasing? If it’s either of the first two, you’re in home-buying shape.
1. Your total income
What other monthly payments do you have? Car loans? Credit card payments? How will you manage paying those while staying on top of a mortgage? If more of your overall income is going toward debt rather than savings, that’s an issue. It’s probably best to put off buying a house if that’s the situation you’re in.
Remember that every dollar of monthly debt requires $2 of income to offset it. Therefore, if you’re thinking of taking on a mortgage that demands $1,800 in monthly payments, you’d need $3,600 of income to offset that expense alone.
2. Your credit score
Second, how is your credit score? This factor can be a double-edged sword for many prospective buyers because some folks who think they have good credit may actually have bad credit, and vice versa. Typically, you need a credit score of at least 580 to score an acceptable mortgage.
3. Your existing debt-to-income ratio
Finally, the main reason prospective home buyers don’t get mortgage loans is the specter of a high debt-to-income ratio. In other words, they fear taking on too costly of a mortgage in relation to their monthly income. This fear ties back to evaluating your income and other financial obligations.
If you’re interested in buying a house and want to do it in a safe, effective manner, seek out an experienced mortgage lender who is willing to help a loan work for you. It may also make sense for you to purchase a fixed-rate mortgage since affordability is a top priority for many buyers.
This article originally appeared on SonomaCountyMortgages.com and was syndicated by MediaFeed.org.
Featured Image Credit: DepositPhotos.com.
