When choosing the best housing loans, many first-time home buyers and even old-timers remain unaware of the traditional ratios for paying off their mortgage against their income. If you’re planning to buy a house in Salt Lake City or anywhere in Utah, City Creek Mortgage noted that mortgage planners may help you determine how much of your salary should go to your mortgage payments.
Home buyers should aim to set around 28% of their income for mortgage payments and around 36% for mortgage and monthly debt payments, such as credit card balances. It can be tempting when your lender increases the qualification ratios, although you have to consider if you can really afford a higher ratio over time.
Still, those who choose to have a lower income-debt ratio have the best chances of paying them on schedule and on budget. Otherwise, you should make significant changes to your household spending to afford that dream house.
Median home prices have increased in several metro areas in the U.S. during the first quarter of 2018, so having a budget will be important to decide whether you want a house in the city or not. Budget planning should include preparations for closing costs from a mortgage deal. Take note that these expenses can account for up to 5% of the mortgage amount and should be paid in cash.
Some lenders even prohibit you to use borrowed funds to cover closing costs, so make sure to plan ahead of time on how you intend to settle them. If possible, think about shortening the payable period of your loan to a 15-year or 20-year term, which would be more cost-efficient than the usual 30-year term.
A mortgage planner not only helps you reach a wise decision on the best type of loan, but also assist you in the application process. Remember to consult one before signing a deal.