Mortgage news

News, trends and analysis of the mortgage and credit market

Wednesday, January 3, 2007

With dozens of competing lenders and mortgage products to choose from, you may think that today's home loan market is terribly confusing. It really isn't, if you know the basic facts about financing a house. That's what this article is designed to give you. Let's start with the questions that are probably uppermost in your mind.
How Large A Mortgage Can I Get?
That depends upon your income and the cost of your new house. Lenders use certain guidelines to determine the mortgage amount they will lend any one home buyer. The two guidelines used are housing expenses and long term debt. Lenders generally say that housing expenses (including mortgage payments, insurance, taxes and special assessments) should not exceed 25 percent to 28 percent of the homeowner's gross monthly income. For Federal Housing Administration (FHA) loans, this figure is not to exceed 29 percent of the home buyer's gross monthly income. With loan guaranteed by the Department of Veteran's Affairs (VA), lenders measure prospective home buyers with "Residual Income," or the monthly income minus expenses. The remainder is then measured against geographical and family size data to qualify the borrower.

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