HOW MUCH MONEY SHOULD YOU BORROW?

July 3, 2014

While it might be tempting to borrow whatever amount of money your lender is willing to give you, it’s important to think carefully about how much you’ll actually need to borrow in order to purchase a new home. From the down payment to taxes to insurance and interest rates, there are many factors to consider when making this important, life-changing decision. Contrary to popular sentiment, there is no standard formula for accurately calculating the specific dollar amount you should borrow when purchasing a new home. Many websites do offer special borrower calculators that claim to factor in important variables, and yet final results vary vastly from one site to the next. Other websites offer general rules of thumb, suggesting that you should never borrow more than 2 1/2 to 3 times your gross annual income, or that 28%, 32%, or even 40% is the maximum amount of debt you should ever take on. And, while these insights may be helpful as you begin thinking about the overall borrowing process, meeting with a reputable loan professional and getting yourself pre-approved (not pre-qualified) is really the only way to know the exact amount of money you can and should borrow. By getting pre-approved, you not only increase the chance of finding the perfect house for your needs, you also become a “cash buyer”, instantly increasing your bargaining power.

As a mortgage professional, I see my role differently than a traditional loan officer. While my job is to match you with the best mortgage available for your specific needs, I feel that it’s also my duty to make sure it’s the most responsible product as well. After all, what if something unforeseen or unexpected were to occur? What if you have an accident or you lose your job? Whether you choose to work with me or not, be aware. A lender will often offer you the maximum amount of money that you qualify for, whether you actually need the full amount or not. Because of this, it’s vital to sit down with a professional you can trust to figure out your complete financial picture.

If you or someone you know could benefit from this type of free consultation, give me a call. I would be happy to assist you!

 

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Contact

 zach.williams@yourstatebank.com

State Bank

4080 W Dublin-Granville Rd

Dublin, OH 43017

The State Bank and Trust Co. and its loan officers, are not liable for information, claims or agreements made by/between the public and third-party entities. These third-party entities may include, but are not limited to: builders, developers, or real estate agents. Even though the loan officer co-sponsoring this site makes efforts to update the information contained, much of it is provided by independent vendors and data feeds, and thus, this site may contain errors, outdated information or purchase conditions, promotions, incentives and/or possible omissions. The State Bank and Trust cannot guarantee the accuracy of information provided, and we encourage buyers to complete their own due diligence in making a decision to build or purchase a home. We also suggest that you seek the professional representation/advice of a licensed Realtor®, as well as any other licensed professional that is appropriate to your purchase decision, including, but not limited to: attorney, accountant, or certified financial planner. Visitors to this site are responsible for the use and decisions made regarding the purchase of a home with regards to the information contained herein. The State Bank and Trust Co. is an Equal Housing Lender. 


Disclaimer: No statement on this site is a commitment to make a loan. Loans are subject to borrower qualifications, including income, property evaluation, sufficient equity in the home to meet Loan-to-Value requirements, and final credit approval. Approvals are subject to underwriting guidelines, interest rates, and program guidelines and are subject to change without notice based on applicant's eligibility and market conditions. Refinancing an existing loan may result in total finance charges being higher over the life of a loan. Reduction in payments may reflect a longer loan term. Terms of any loan may be subject to payment of points and fees by the applicant. The State Bank and Trust is an Equal Opportunity Lender. | Privacy Policy