We’re here to help with all the technical details of a mortgage situation at Altius Mortgage and our partners at Mortgage Ogden, but that’s not all we do. Our mortgage brokers are also here to offer advice, opinions and expertise throughout the process, including areas you might be confused about.
One of the largest such areas many people need help with? Determining what sort of mortgage they can realistically afford for the future. Here are a few of the most important factors that will play a role in what sort of home loan you can afford.
Income Vs. Expenses
Within your finances, lenders are going to be looking at both your income and regular expenses. Income will be calculated as net, or on a post-tax basis. A vital factor is debt to income ratio – for many of the best mortgage rates and loan terms, lenders will require a ratio here that’s under 40 percent based on growth monthly income before taxes.
There are a few popular rules of thumb that come into play here when you’re searching for a new home. One states that you should never take on a mortgage for more than two and a half times your annual salary, for instance, and this can be a good baseline for many people.
Especially in recent years, down payment amounts have become a huge factor in mortgage situations. Coming up with a 20 percent down payment or more allows you to avoid private mortgage insurance in most cases, which can create a significant savings for you over the life of the mortgage.
A credit report with any significant negative marks, such as late payments or defaults, could have a big impact on the loans that are right for you. Bad credit can cause mortgage rates to skyrocket, and will make you ineligible for certain kinds as well.
Want to learn more about the right kinds of loans for your financial situation? Our brokers are here to help. Contact us at Altius Mortgage today.