If you are buying a house calculating how much home you can afford is the fist thing you need to figure out. That amount is based on your DTI (debt to income) ratio. Very often they are not going to allow you to have more than a maximum total debt to income ratio of more than 36%. So that means your housing, your car payments, your insurances, all of it totaled up cannot be higher than 36% percent, if it is you’re going to run into some challenges.
For the housing debt alone, typically they want to see it in the 28%, some of them will get you up to 33% but that’s pretty aggressive, so the best place to start is to call a mortgage professional early! Too many times we talk to buyers where they are going out to look at homes, they’re driving around, and they’re excited about the process but they haven’t even spoken to a lender. That is a very bad idea and exactly the opposite way you should do it. Very often we won’t take a buyer out to see a home prior to speaking to a lender because it’s only setting them up for failure.
So the first thing you want to do is call a local mortgage professional. We have plenty we can refer you to, if you have questions about that, give us a call. If you have questions about selling or buying real estate in Northern Virginia, also call us on that… we’ve got the answers.
If you want more information and you’d like access to our 31 page home buyer report, click this link today.
By Steve Bradley