WHAT'S YOUR LIMIT?

There are two ways to answer this question. First is to understand your budget and how it relates to your personal lifestyle; second, is to understand your budget and how it relates to your ability to borrow money. Just follow these simple steps:

  • Establish a budget (if you have not already done so).
  • Know your credit score. You are entitled to a free copy once a year. Visit www.annualcreditreport.com
  • Realize your actual spending habits (i.e. your social life).
  • Review habits that may or may not change.
  • Prior to meeting with a lender, determine a monthly payment that best fits your budget.

Remember, banks are in the business of selling money. Chances are you will find that the bank or mortgage company will be willing to lend you more than you prefer. This is not unusual as it's only a guideline; however, stick to your budget. A good rule of thumb is that your mortgage payment should be no more than 25 to 33 percent of your monthly gross income, and your total debt-to-income ratio should be less than 38 to 40 percent of your gross income. What's most important is to establish a monthly payment and to GET PRE-QUALIFIED or PRE-APPROVED

To get a better sense of your financing options please feel free to use our Home Finance Calculators