Mortgage Hysteria: How Much Can You Borrow?

Getting the most for your money is the goal of most people these days. Credit concerns and high housing costs can look like a giant question mark in your life. You may find yourself wondering "I need a mortgage, how much can I borrow"? Having a nice place to live in with an affordable monthly payment is a realistic goal that can be achieved.

Calculating what you bring home each month is the first step. What you would so is consider your straight weekly pay (no overtime or bonuses), multiply by 52 and then divide by 12. This is the money that you are pretty sure you will make barring any unforeseen circumstances.

Once you have figured out your annual and monthly pay you can decide how much money you can borrow. Basically someone bringing home $25,000 each year earns about $2083 each month. This would be called your gross income, all the money you make before any deductions, including taxes.

Next you would need to subtract any credit loans from this amount, such as: tuition, credit cards, auto, bank notes, or even non-credit like child support. Most lenders will allow you to borrow around 1/3^rd or about 36% of your total gross income

Don't be afraid of all the numbers, mortgages are a long term decision and it just takes a little work to make sure you are making the right choice. With something that could last between 7 and 40 years (longer than most relationships these days!) you don't want to rush. Lenders are also going to look at your job stability and your future income earning ability.

Thankfully Internet tools are also available to help you calculate these figures. On-line mortgage calculators, brokers, agents and lenders are ready and willing to help you in the pre-mortgage process. Finding a loan match is important for all the parties involved.

When deciding to borrow, it is important to not leave out any options. Money you have saved up could be a down payment and help you get a larger loan. While you may be able to do this, it is not an absolute necessity. Your idea of the perfect house may cause a loan that is more than you can handle, leading to many sleepless nights.