How Much Home Can You Afford?
Applying for a mortgage and buying a house is a major financial decision that can affect your bottom line for up to 30 years or more, so it is important to understand how much house you can actually afford. This week, we're taking a look at a few things you should consider when planning to buy a home at the Lake of the Ozarks to ensure you're comfortable with your home purchase. Consider Your DTI The first step in paving a smooth financial path for yourself is to add up your monthly income and expenses. Most mortgage lenders use the 28-41 rule to determine what you can afford and how much money they’re willing to lend you. The 28-41 rule states that your maximum household expenses shouldn’t exceed 28 percent of your gross monthly income. Your total debt, which includes everything from student loans to credit cards, should fall below 41 percent of your income. This number is your debt-to-income ratio, or DTI. However, in today’s new lending world, ratios have changed to ...