How Much Mortgage Can You Afford

by John
(New Jersey, USA)

Time out! How much mortgage can you afford? Keep in mind as you read the following letter from John, it is your mortgage and your home. Don't get caught in the trap believing if a lender qualifies you for a higher mortgage payment that you can afford it.

Hi Kate, My good friend needs $155,000 mortgage for a divorce settlement.
  • The home is being valued at $325,000

  • She has no mortgage balances or other debts

  • Annual property taxes are about $9,000

  • Her gross annual income is $40,000

  • Child support will be around $1,100 month

  • Her credit score is 800

I need to find the best configuration of a loan for her such as an interest only 10/20 fixed as well as 30 year fixed rate mortgage.

I think she can afford about $1,300 per month in PITI (the mortgage payment including property taxes and home owners insurance) given other expenses of running a household with 3 kids.

Kate Answers: How Much Mortgage Can You Afford

Hi John, Here is the most important question to keep asking your friend. How much mortgage can you afford?

Affordability is not to be confused with qualifying for a mortgage. With an 800 credit score and borrowing less than 50% of her appraised value, it is a pretty safe assumption that loan approval should not pose a big obstacle.

But only a homeowner knows the monthly house payments she can afford.

In fact, she may be offered a greater sum of money than she originally asked to borrow. And herein lies the danger for any homeowner... assuming the lender has an inside track to calculating affordability.

So I will repeat this...

Lenders determine how much you are qualified to borrow based on one-size-fits-all guidelines.

But you determine how much you are comfortable borrowing based on what is affordable to YOU.

John, please make sure your friend reads How Much Mortgage Can You Afford because mortgage companies won't be responsible for the ongoing monthly house payments. She will be!

I hope you'll come back to my website again in the future. Of course, all of my information is free.

So remember to bookmark to your favorites and visit often for up to date tips for buying a house, mortgage help and refinancing advice. You can also invite friends to comment on this page or create a page of their own like you did.

Best Wishes,

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Riveting Fixed, Hybrid, and Adjustable Rate Mortgage Help

Comparing Fixed and Adjustable Rates - Refinancing? Buying a house? Get current rates right here.

Get the lowest payment with this best fixed rate mortgage plan yet pay it down quickly.

The 15 year fixed rate mortgage will save thousands plus you'll be mortgage free after 180 payments!

What would you do with an extra $87,789? Meet the 20 year fixed rate mortgage.

Introducing the 25 year fixed rate mortgage combining security with a lower interest rate.

I crown the 30 year fixed rate mortgage King Of Mortgages!

Meet the 40 Year Fixed Rate Mortgage when fast mortgage pay offs aren't your cup of tea.

Are adjustable mortgage rates good or bad? It depends on your circumstances.

Plan for changes to your adjustable rate mortgage.

If the cheapest fixed rate mortgages will save you money, why pay for more?

Are interest only mortgage loans hidden adjustable rates?

Ask Kate About ARMs - Get an answer about mortgages that adjust.

ARM Ask And Answer - Questions about adjustable rate mortgages, each with a individual answer from Kate.

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