The first thing a lender looks at when determining your ability to qualify for a mortgage is called your 0debt-to-income0 ratio. That is the percentage of your gross monthly income that you spend on long term debt. This includes your mortgage payment, taxes, insurance and HOA fees. I also includes any consumer debt payments such as credit cards, student loans or installment payments. Plus it includes car payments.
Now you0re wondering just how much that new car payment can reduce the purchase price of your new home. Let0s crunch some numbers. Say you earn $5000 per month and have an average car payment of $400 per month. Calculating based off an 8% interest rate that car payment would cut your purchase power on your new home by about $55,000. That makes a considerable difference in the type of home you will be able to purchase.

It does not matter if you feel you can afford both the more expensive home and the car payment. The mortgage companies approve based on their guidelines not yours. You should still take the time to get pre-qualified with a lender.
Getting pre-qualified with a lender is one of the first steps in any home purchase. Your Realtor […]

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