Home isn’t only where the heart is, it’s also where tax deductions reside.Home values may still be depressed, but homeowners can rely on some sizeable tax breaks. “It really pays from a tax
Understand Your Buying Power
It is important to remember Not All Lenders Were Created Equal. Simply put, there are different types of lenders as there are different types of loan products. Lenders can vary from Credit Unions, National Banks, Mortgage Bankers or Mortgage Brokers. To further complicate matters, loans vary from Conventional, FHA, VA, USDA or Portfolio Products. An experienced buyers agent can help you navigate through these and help you make sense of what will work for you and your financial situation. The following is just a simplified guideline to help you determine your buying power.
Start with the 28/41 rule. Many lenders use it to determine eligibility or also known as debt to income ratio.
The "28" refers to the percentage of your gross monthly household income that should be allocated for housing costs each month, including principal, interest, taxes and insurance.
EX: Total House Payment / Gross Monthly Income = House to Income Ratio or "28" Rule
The "41" represents the total debt that you carry. It shouldn't exceed 41 percent of your total gross income.
EX: Total House Payment + Total Monthly Debt / Gross Monthly Income = Debt to Income Ratio or "41" Rule
As long as your monthly debt – like car, student loan and credit card payments – doesn't exceed the 41 percent, you're probably in good shape to qualify for the loan amount that meets your "28" calculation.
Looking for more personal attention? A Pro Realty Group agent can guide you through the entire home-buying process.