subject: How Much Dayton House Can You Afford? [print this page] How Much Dayton House Can You Afford? How Much Dayton House Can You Afford?
How Much Dayton House You Can Afford
There are lots of thing to consider when determining how much Dayton Real Estate you can afford. As a potential Dayton home buyers, it's important you budget property for your mortgage payment.
Debt-To-Income Ratio
As you think about buying a Dayton home, you should first consider the amount of your monthly mortgage payments. If you already have a lot of monthly debt (e.g. car payments, credit cards, etc.), this will affect your ratio, therefor reducing the mortgage amount you can afford.
Most lenders will discount any loans that you will have paid off within one year when determining how much of a home you can afford. As a general rule, your mortgage payment should not exceed 25-30 percent of your monthly take-home pay.
Dayton Mortgage Loan Term
Although you will end up paying more interest in the long run, you will find that you can afford a more expensive house if you request a loan term of 25-30 years, compared to a shorter term of 15 years. Determine where you want to be in 15 years. If the answer is not having mortgage payments, then focus on 15 year mortgages.
Interest Rates
When you look at market interest rates, all you see is a number. Hopefully, it's a single digit that's comparable with current market rates. Most Dayton home buyers already know that their interest rate affects their monthly payment which, in turn, is determined by the borrower's income. Lower interest rates mean that you can afford a larger principal loan amount, which means a more expensive house. The longer your loan term, the higher the interest rate will be.
Your Credit History
Because your past credit history will play a large role in determining your interest rates, it will also impact the affordability of a Dayton house. For instance, a buyer who pays six percent interest will save a considerable amount of money over a buyer who pays eight percent interest on their home loan. It may not seem like much now but, when averaged over time, the savings could be tremendous.
Down Payment Amount
Believe it or not, the amount of your down payment will not only show the lender how serious you are about buying a home, but it will also affect your ability to afford a particular house. For instance, if you were to qualify for a Dayton home loan of $200,000, but your dream home was currently listed for $250,000, a down payment in the amount of $50,000 would get you into the home.
The previous is just an example, but it does show how a down payment can affect the price of the home that you are able to afford. Some lenders may only require a five percent down payment, but you are free to pay as much above that as you wish. A larger down payment can also reduce the principal loan amount, which thereby reduces the monthly mortgage payments. The important thing to consider is when shopping for a Dayton home don't spend everything you have on a mortgage payment. There is lots of Dayton Real Estate out there to choose from.
