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How much house can I afford?

How much house can I afford? Purchasing a home is one of the biggest money moves you’ll make in your lifetime. And if you’re like most home buyers, you will need to finance at least some portion of your large purchase with a mortgage. So what do mortgage lenders look at to determine how much house you can afford? A lender will examine things like credit score, debt-to-income ratio, and down payment. And while your credit score is a major factor in getting you approved for a mortgage, your debt-to-income ratio is actually the indicator of how much house you can realistically afford. What is a debt-to-income ratio (DTI)? The debt-to-income ratio is a percentage of the borrower’s total monthly obligations including housing expenses and recurring debts compared to reliable monthly income. Your DTI tells lenders how much money you spend versus how much money you have coming into your household, and it’s used to determine your ability to repay the mortgage, as well as other outstanding debts. How and when should I calculate DTI? As soon as you decide you’re ready to start the home buying process, schedule some time to talk finances with a lender that specializes in mortgages. Your mortgage lender will help you calculate your DTI, so you are aware of what works best with your budget. You can also calculate your DTI yourself by adding up your monthly minimum debt payments and dividing it by your monthly pre-tax income. What debts are included in DTI? [...]

Understanding Mortgage Terms: A Guide for First-Time Home Buyers

Buying a home can be challenging. Especially for a first timer. There are decisions to be made and mounds of paperwork to sign. And the amount of industry terms thrown around can make it seem like your home buying experience has you learning a new language. Sound familiar? Relax. We’ve got this. Before you hire a mortgage translator (these don’t exist, by the way), check out the common mortgage terms below as translated by our Wilpower Team at Silverton Mortgage. What is a mortgage? In simple words, a mortgage is a loan that enables a lender to purchase a home or a property. Contrary to popular belief, it’s not a requirement that you use your personal bank for a mortgage loan. In fact, some banks don’t have a mortgage lender at all. To ensure you have the smoothest home buying experience possible, you should find a lender that specializes in mortgages. What is a mortgage rate/interest rate? A mortgage rate is the interest that is charged on the mortgage loan. Your mortgage rate is determined by your lender. It can be fixed (stay the same for the term of your loan) or it can be variable (fluctuate based on a benchmark mortgage rate). Also commonly referred to as the interest rate, your mortgage rate is the cost you will pay each year to borrow the money. It does not reflect fees or any other charges you may have to pay for the loan. What is APR? Unlike the mortgage/interest rate, […]

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