Affordable Home Loans - How Much Can I Afford

by David C. from Channahon, Illinois

Ask Kate about affordable home loans and determining how much mortgage you can afford: David is puzzled. He makes a lot of money yet can't afford his monthly house payment. He's recently heard a commercial that's advertising to people in his predicament. David asks if I'm familiar with the company name. My antennas go up because David describes himself as someone who commonly gets targeted by predatory lenders.


David asks Kate for Lender's Name with Affordable Home Loans

Hello Kate, I make good money but I can't afford my home. Recently on a local news channel, I heard a commercial advertising to folks that make good money but cannot afford their mortgage.

That is precisely my predicament.

Affordable Home Loans: How Much House Can You Afford
I was driving and could not write at the time and for the life of me do not remember what the company name was or if they are even in Illinois.

The taxes where I am at are very high but we love the area. I have no vehicle payments and 2 credit cards with a 3k limit each both of which are not maxed. I've regained the checkbook from my wife and still cannot figure out why and how we got in such a situation.

I'm ready to call my lender and ask for some sort of revision to my mortgage but am reluctant right now. I do not, however, want to let this get out of control.

Right now I owe December's mortgage payment and January's payment is now due, $5,000.00 that I simply do not have.

Any advice would be greatly appreciated and if by chance you know of the company I speak of above (I want to say the name started with a U), please advise. Thank you for reading.

Kate Answers: Affordable Home Loans - How Much Mortgage Can I Afford

Ask Kate at Get-Your-Best-Mortgage-Rate.com
Dear David,

If you have less than 21 percent equity in your home and your mortgage was purchased by Fannie Mae or Freddie Mac on or before May 31, 2009, you may be eligible for an affordable 30 year fixed rate with the Making Home Affordable Refinance Program (HARP 2).

Refinancing with a HARP loan can be originated through any participating lender.

Or if you are in imminent danger of defaulting due to a financial hardship, you may be eligible for HAMP loan modification. Only your specific loan servicer can modify your home loan. Borrowers are not free to shop lenders as with HARP 2 refinancing. Go here for more information: HAMP Tier 2 Modifications Offer Hope.

You can also call 888-995-HOPE (4673) for free housing counseling services offered through the Making Home Affordable Program. Read more about free Making Home Affordable Housing Counselors here.

Affordable Home Loans vs Low Initial House Payments

But David, I want to talk about lenders who advertise low mortgage payments. Often these offers involve adjustable rate mortgages with low start rates and prepayment penalties.

Others involve negative amortization, or catch you in a balloon payment.

Either way, you could end up owing more than you borrowed or be charged a lump sum at the end of your term because you were lured into an initial cheap house payment.

In spite of starting out with low payments, underwriters use higher interest rates to qualify borrowers for risky loans. With your substantial income, you might easily qualify. But this doesn't mean you can afford the mortgage.

So be careful. If the term starts out with a low interest rate, you can be sure your monthly house payment is going to increase, often leaving you with an unaffordable mortgage after paying too much for a refinance. You must read the fine print!

How Much Can I Afford vs How Much Can I Borrow

I've said it before but it's worth saying again. Don't fall into the trap of depending on a lending professional to tell you much mortgage you can afford. They can only tell you how much you will be qualified to borrow from the bank.

Read more about affording vs qualifying at How Much Mortgage Can I Afford.

The Mortgage Freedom Project Brings Homeowners Full Circle

The Mortgage Freedom Project: Pay Off Your Mortgage Faster and Easier than You Ever Thought Possible with Kate Ford's Magical 6-Step System
After empowering you to get the best mortgage rates, lowest house payments, and safest terms possible, the next step I propose is to pay off your mortgage early!

That's right! Pay off your mortgage early to own your home free and clear. It's possible and here's what's fun. You can beat the bank at their own game!

Here's what you won't have to do.
  • You won't be asked to buy expensive software.

  • You won't have to give up your lifestyle or get a second job.

  • In fact, you won't have to come up with any extra cash.
Discover the possibility of paying off your debt, including the mortgage, at The Mortgage Freedom Project, a new book by Kate Ford. (Yep, that's me, Ask Kate!)

Good luck and best wishes,

Ask Kate

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