Find an Affordable Mortgage
Debbie WilsonLoanBiz Columnist
A hefty mortgage payment can make your house and your
lifestyle unaffordable. To prevent your home loan from becoming a financial
albatross, consider these mortgage tips:
Budget for Your Mortgage
Most lenders consider it financially healthy for your house
payment (principal, interest, taxes, and insurance) to eat up no more than
28-32% of your monthly gross income. This is called your front-end ratio. Add
your car, credit card and other payments to your housing expense, divide that
by your monthly gross income, and you come up with what lenders call your
"back end" ratio. This shouldn't exceed 36%. Of course, your credit
rating affects what lenders will approve--great credit can give you more
latitude with your loan amount.
Mortgage Approval Doesn’t Mean You Have to Take the Money
If a lender approves a higher mortgage than you feel
comfortable with you don't have to use it all or take that loan. You can lower
your payment by choosing a less expensive house, coming up with a bigger down
payment, opting for a hybrid ARM with a lower rate, by paying (or asking your
seller to pay) points to buy your rate down, or by taking a loan with a
prepayment penalty. Be wise about what you really want to spend.
Know Your Mortgage Well
Read all mortgage documents carefully before signing. Ask
your lender questions about anything you don't understand. It's your job to
make sure you know your loan before you commit to the debt. If you don't get
any help from your lender, switch to one you feel comfortable with, or even consider
hiring a real estate attorney. Many offer flat up-front fees for their service.
Don't get caught uniformed. With a little foresight and some mortgage
pre-planning, you too can avoid trouble on the home front.
Source:
Federal Housing Administration
About the Author
Debbie Wilson owns and operates a lakeside resort. Her previous experience includes profitability consulting for a national healthcare company. Debbie holds a B.A. in Business Management with a minor in Physical Education.
