Before you begin looking for a new home to buy whether it be in Nashville or any other US city you need to look at what you can realistically afford to spend on it. This is something that not only first time buyers have to take into consideration but also those who are choosing to sell the home they live in currently. It does not matter whether you are buying a Nashville home or one in another part of the US you really do not need to be realistic about what you can easily afford.
There are a number of things which one has to take into consideration that will help you to then determine just how much you realistically can spend on the property you would like to buy. In this article we look at just what some of these considerations are.
1. The best way for you to determine just how much you can afford to spend on a home is by multiplying your annual income by 2.5. Although there are going to be certain other factors which could influence the final figure you arrive at but this acts as a good baseline, when you start your initial house search.
By using this calculation you are also able to identify what you will be able to obtain when you apply for a pre-approved loan. Because of the current financial climate a person with a home loan that is pre-approved will be in a much stronger position when it comes to negotiating with a seller.
2. Lenders don't only look at how much you earn when considering a home loan application but also how much the property is selling for. This way they can the look to see just how much you can afford to make in repayments to them each month. Mostly if you repayments work out to be around 25 to 33% of your gross monthly income then they are much more willing to provide you with the financing that you need. Anything over these percentages and the chances of your loan being approved is greatly reduced.
3. If you happen to have a good credit history then lenders are more willing to approve the loan you request. You need to be showing that you have the ability to meet the payments on any debts you currently have and that these do not go above 40% of what you earn annually.
In this article we have looked at just some of the things you need to be considering when trying to work out how much you can afford to borrow in order to purchase your dream Nashville home. However, there are more factors which could affect what you can realistically afford to borrow. Other things that you need to take into consideration are the interest rate repayments and the types of mortgages that you are able to apply for.
There are a number of things which one has to take into consideration that will help you to then determine just how much you realistically can spend on the property you would like to buy. In this article we look at just what some of these considerations are.
1. The best way for you to determine just how much you can afford to spend on a home is by multiplying your annual income by 2.5. Although there are going to be certain other factors which could influence the final figure you arrive at but this acts as a good baseline, when you start your initial house search.
By using this calculation you are also able to identify what you will be able to obtain when you apply for a pre-approved loan. Because of the current financial climate a person with a home loan that is pre-approved will be in a much stronger position when it comes to negotiating with a seller.
2. Lenders don't only look at how much you earn when considering a home loan application but also how much the property is selling for. This way they can the look to see just how much you can afford to make in repayments to them each month. Mostly if you repayments work out to be around 25 to 33% of your gross monthly income then they are much more willing to provide you with the financing that you need. Anything over these percentages and the chances of your loan being approved is greatly reduced.
3. If you happen to have a good credit history then lenders are more willing to approve the loan you request. You need to be showing that you have the ability to meet the payments on any debts you currently have and that these do not go above 40% of what you earn annually.
In this article we have looked at just some of the things you need to be considering when trying to work out how much you can afford to borrow in order to purchase your dream Nashville home. However, there are more factors which could affect what you can realistically afford to borrow. Other things that you need to take into consideration are the interest rate repayments and the types of mortgages that you are able to apply for.
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