How Much Money Should You
Borrow?
While it might be tempting to
borrow whatever amount of money your lender is willing to give
you, it's important to think carefully about how much you'll
actually need to borrow in order to purchase a new home. From
the down payment to taxes to insurance and interest rates,
there are many factors to consider when making this important,
life-changing decision.
Contrary to popular sentiment, there is no standard formula
for accurately calculating the specific dollar amount you
should borrow when purchasing a new home. Many websites
do offer special borrower calculators that claim to factor in
important variables, and yet final results vary vastly from
one site to the next. Other websites offer general rules of
thumb, suggesting that you should never borrow more than 2 1/2
to 3 times your gross annual income, or that 28%, 32%, or even
40% is the maximum amount of debt you should ever take on.
And, while these insights may be helpful as you begin thinking
about the overall borrowing process, meeting with a reputable
loan professional and getting yourself pre-approved (not
pre-qualified) is really the only way to know the exact amount
of money you can and should borrow. By getting pre-approved,
you not only increase the chance of finding the perfect house
for your needs, you also become a "cash buyer", instantly
increasing your bargaining power.
As a mortgage professional, I see my role differently than a
traditional loan officer. While my job is to match you with
the best mortgage available for your specific needs, I feel
that it's also my duty to make sure it's the most responsible
product as well. After all, what if something unforeseen or
unexpected were to occur? What if you have an accident or you
lose your job?
Whether you choose to work with me or not, be aware. A lender
will often offer you the maximum amount of money that you
qualify for, whether you actually need the full amount or not.
Because of this, it's vital to sit down with a professional
you can trust to figure out your complete financial picture.
If you or someone you know could benefit from this type
of free consultation, give me a call. I would be happy to assist
you! |
Call Today!
(860) 649-LEND (5363)