How to determine how much house you can afford

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HUNTSVILLE, Ala. (WAFF) – Can you really afford that house you’ve been eyeing for the past month?

With interest rates rising and demand high, you want to arm yourself with as much information as possible when looking for a home so you can make the best decision for you and your budget.

Given all this, WAFF spoke to Amy Broadhurst, head of mortgage origination at Redstone Federal Credit Union.

Here are some things she recommends:

To get started, ask yourself these questions:

  • What is my total gross income and total debts now?
  • Of the remaining income, what percentage can I comfortably spend on housing?
  • Gross income is your pre-tax income from all sources that will be used for the refund.
  • Total debt includes all loan repayments. All installment loans and revolving payments, such as car payments, student loans, credit card payments, and department store card payments. This information is necessary for every applicant on the loan.
  • Mortgage calculators are available online at Redstone’s website and other financial institutions to help you determine the amount of principal/interest on a given loan amount. You enter your gross monthly income, monthly debts, down payment amount, interest rate and term of the loan – usually 15, 20 or 30 years. A 30-year term will give you the lowest monthly payment.
  • Interest rates also have an impact on the total monthly payment. Your credit score will be a factor in determining the rate you can get, as well as the amount of your down payment.

For more ways to save, be sure to tune in at noon every Friday for the “Financial Friday” segment of WAFF 48.

Copyright 2022 WAFF. All rights reserved.

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