Friday, August 05, 2005
What is Affordable Housing?
Did you know that a person can make a million dollars a year and not have affordable housing? Affordable housing, contrary to what people tend to think, is simply housing that is affordable. It's really that simple.
Often times a bank will look at two numbers when they are trying to determine how much home you can afford. They will make sure that you are not spending more than 29% of your income on your mortgage payment. They will also make sure that you do not have debts totalling more than 41% of your income. These numbers are not set in stone, but they are general guidelines. A person with more than 41% of their income in debt can still qualify for a loan if their credit history and credit scores are very good. It is up to the lender to decide what those exact percentages should be based on your situation.
At the same time, however, you need to be careful that you don't accumulate too much debt. Taking on a mortgage that will put you over the 50% debt figure will be a bad thing, regardless of how much money you make. Any lender that wants to put you in that position is a lender that you should run away from, fast and furious. They do not have your best interests in mind, only their profit. Those lenders will also, generally speaking, charge you at a higher interest rate than a typical mortgage. This leaves you in the position of having too much debt and paying too much for it. Neither of those situations is good for you in the long run.
You can learn more about the homebuying process by taking our Homebuyer Education Classes. Call our office for more information!
Often times a bank will look at two numbers when they are trying to determine how much home you can afford. They will make sure that you are not spending more than 29% of your income on your mortgage payment. They will also make sure that you do not have debts totalling more than 41% of your income. These numbers are not set in stone, but they are general guidelines. A person with more than 41% of their income in debt can still qualify for a loan if their credit history and credit scores are very good. It is up to the lender to decide what those exact percentages should be based on your situation.
At the same time, however, you need to be careful that you don't accumulate too much debt. Taking on a mortgage that will put you over the 50% debt figure will be a bad thing, regardless of how much money you make. Any lender that wants to put you in that position is a lender that you should run away from, fast and furious. They do not have your best interests in mind, only their profit. Those lenders will also, generally speaking, charge you at a higher interest rate than a typical mortgage. This leaves you in the position of having too much debt and paying too much for it. Neither of those situations is good for you in the long run.
You can learn more about the homebuying process by taking our Homebuyer Education Classes. Call our office for more information!
