How much home can you afford?

Most people have a general idea of how much they feel comfortable spending. It's equally important to know how much your lender calculates you can afford. With assistance provided by your A&H GMAC Real Estate Sales Representative, you'll be able to better prepare the many details required during the financing application process.

• Evaluate your financial situation as the lenders do. Typically, your total monthly housing costs should not exceed 32% percent of your gross monthly income. Or, housing costs plus any outstanding monthly long term debt (car loans, credit card balances, etc.) should not exceed 40% percent of gross monthly income.
  
  
• Ask how your lender determines the total monthly housing cost figure. It usually includes your mortgage principal and interest payments, property taxes and hazard insurance.
  
  
• Determine how much your financial institution is willing to lend you by completing our Mortgage Calculator or calling your A&H GMAC Real Estate Sales Representative for help during the prequalification process.
  
  
• Know how much you can afford in monthly payments. Lenders factor in sales price and down payment, but place more importance on how much you can handle your monthly expenses.
  
  
• Become a preapproved buyer. Preapproval gives you more buying strength since the lender makes a credit decision and preapproves you for a certain mortgage amount. You'll know what price range your lender will approve -- and you'll be in a position to make an offer as soon as you find the right home.