Tips & Topics - Mortgages
How Much House Can I Afford?
If you’ve decided that you would like to buy a house, the next step is determining how much home you can afford.
- Ginnie Mae offers an Affordability Calculator to help you determine a reasonable estimate for how much housing you may be able to afford.
- The Federal Reserve Bank of Atlanta offers a mortgage calculator to determine if you would qualify for a specific mortgage product based on your financial profile and your lender’s underwriting criteria.
- The U.S. Department of Housing and Urban Development has created a guide explaining the nine-step process for buying a home, and addresses the following topics:
- Figure out how much you can afford
- Know your rights
- Shop for a loan
- Learn about homebuying programs
- Shop for a home
- Make an offer
- Get a home inspection
- Shop for homeowners insurance
- Sign papers
Before contacting a lender, it is important first to understand what mortgage options might be available to you. Remember, not every mortgage available in today’s mortgage marketplace is necessarily right for you. Also, it is important to understand how seemingly small changes in interest rates can affect your monthly payment as well as the total interest you will pay over the life of that loan.
When it comes to mortgages, remember this simple rule of thumb: Lower mortgage payments now will also translate into higher mortgage payments later, while higher payments now translate into lower costs later. If your loan is structured so that your earlier payments are lower, you WILL pay more in interest over the total life of the loan.
- The Federal Reserve Board of Governors offers a Mortgage Comparison Calculator to help you compare the monthly payments and the amount of equity you build in your home over time for several different types of mortgages.
- Looking for the best mortgage? The Federal Deposit Insurance Corporation has created a guide to help you comparison shop for your mortgage.
- The Federal Reserve also offers a Mortgage Shopping Worksheet to help you easily compare mortgages from different lenders.