Deciding how much house can afford depends upon your lender. That’s why the Savage Team will always ask you to get pre-qualified before getting serious about looking for homes.
Lenders are careful, but they make qualification decisions based on averages and formulas. They won’t understand the nuances of your lifestyle and spending patterns quite as well as you do. So, leave a little room for the unexpected – for all the new opportunities your home will give you to spend money, from furnishings, to landscaping, to repairs.
Historically, banks use a ratio called 28/36 to decide how much borrowers could borrow. An approved housing payment couldn’t be more than 28 percent of the buyer’s gross monthly income, and his or her total debt load, including car payments, student loans, and credit card payments, couldn’t be more than 36 percent. As home prices have risen, some lenders have responded by stretching these ratios to as high as 50 percent. No matter how expensive your market though, we urge you to think carefully before stretching your budget quite so much. Today much of what you can qualify for is dependent on your FICO score, the higher the score it’s easier to be approved
Deciding how much you can afford should involve some careful attention to how your financial profile will change in the upcoming years. In the long run, your own peace of mind and security will matter most.
We prefer with working with local lenders we trust to give you good advice when determining how much house you can afford and who we have learned give our client great customer service. List below are three local lenders that Savage & Company recommends and who we know will treat you honest and fairly plus give you the best rate available.
Carl Heimlich – American Equity Mortgage www.americanequity.com Phone: (434) 989-2274
Jenna Peregoy – Atlantic Coast Mortgage www.atlanticcoastmortgage.com Phone (434) 531-0719
Tammy Wilt – Movement Mortgage www.movementmortgage.com Phone (434-242-0046)
As always, if you have questions don’t hesitate to call us at 434 951-9244