Financial Friday: How to determine how much house you can afford
HUNTSVILLE, Ala. (WAFF) - Can you really afford that house you have been ogling for the last month?
With interest rates rising and demand high, you want to arm yourself with as much information as possible while house-hunting so that you can make the best decision for yourself and your budget.
With all of this to consider, WAFF spoke with Amy Broadhurst, Manager, Mortgage Origination at Redstone Federal Credit Union.
Here are some things she recommends:
To get started, ask yourself these questions:
- What is my total gross income and my total debts now?
- Of the remaining income, what percentage can I comfortably spend on housing?
- Gross income is your pre-tax income from all sources that will be used for repayment.
- Total debts include all loan payments. All installment loans and revolving payments, such as car payments, student loans, credit card payments, and department store card payments. This information is needed for each applicant on the loan.
- Mortgage calculators are available online at Redstone’s website and at other financial institutions to help you determine what the principal/interest payment would be on any given loan amount. You input your gross monthly income, your monthly debts, the amount of your down payment, interest rate, and the loan term – usually 15, 20, or 30 years. A 30- year term will give you the lowest monthly payment.
- Interest rates also impact the total monthly payment. Your credit score will be a factor in determining the rate can you get, as well as the amount of your down payment.
For more ways to save, be sure to tune in at noon every Friday for WAFF 48′s “Financial Friday” segment.
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