Choosing to purchase a new home can be exciting and stressful at the same. It can be even more stressful when choosing a real estate income property because this will create more debt and payments for your family. Understanding how much home your budget can afford can help you start your home search and assist you in staying within your budget. Not sure how to determine how much Outer Banks income property your family can afford? Learn more about these factors to help focus your budget!
Monthly Income before Taxes
When applying for a mortgage, one of the first questions the company will ask is your monthly income. Depending on your family’s situation this may only include one to two incomes. If you are looking to purchase an investment property with a group, all incomes need to be factored into this number. This will help determine disposable income based on the average borrower. The more disposable income available, the higher your loan may be or your payment and interest rates may be lowered on a certain amount borrowed.
The total amount of a down payment plays a large factor in determining your monthly payment costs. The larger the amount that is submitted as a down payment lessens your monthly payment rate as the mortgage company is receiving a percentage of the borrowed money up front. This can help lower the monthly payment your family or group will need to provide. Another option is to put down a larger down payment and keep your monthly payment above the average which will help you pay your investment property off quicker.
Monthly Debt Payments
Existing debt can limit the amount your mortgage loan will total. If a large portion of your family or group’s disposable income goes to paying for other debts, the total amount you are able to pay monthly on your mortgage will be limited. This often lessens your mortgage amount because the mortgage company cannot soundly give the borrower an amount of money they can’t afford to pay back.
Mortgage Interest Rate
The interest rate that you feel comfortable accepting will also determine the total amount of your mortgage. The lenders must make a percentage on the money borrowed and the percentage chosen can benefit your total mortgage.
All of these play a deciding factor as to how much home you can actually afford. To find a great mortgage company, please see this list of recommended vendors from Eillu!