Owning a Santa Cruz home can be a sign of independence and success. It allows you to build up equity and the mortgage interest and property taxes are tax-deductible. Can you afford it, though?

Reputable lenders look at a list of criteria to decide how much they’ll loan you. This list includes:
       • Credit score
       • Existing assets including cash
       • Car leases or loans
       • Credit card balances
       • Debt consolidation loans
       • Home equity loans
       • Installment loans
       • Student loans
       • Other monthly debts
       • Size/source of your down payment

If you’d like to get an idea of what you can afford before talking to a lender, here are a few tools you can use to decide whether a Santa Cruz home is within your budget:

• As a rule of thumb, your house hunting budget shouldn’t be more than 2.5 times your pre-tax annual income. If you earn $50,000 a year, your budget for house hunting should be around $125,000.

• Your Housing Expense Ratio, which is principal, interest, taxes and insurance (PITI) shouldn’t be more than 25% to 28% of your pre-tax monthly income.

• You're Debt-to-Income Ratio should be no more than 36% of your pre-tax monthly income. This is the ratio between how much you owe and how much you earn.

• Use an online calculator to figure how much home you can afford.

“Qualifying for” and “can afford” are two different things. Shopping for a Santa Cruz home within your budget will save you a lot of heartache now and in the future.

If you'd like help determining how much mortgage you can really afford, I can help. 

For more information about buying and selling a Santa Cruz home, email me at lauren@laurenspencer.com or give me a call at 831.662.6522.

For additional real estate information, please visit my home page at www.MySantaCruzRealEstate.com.

Posted by Lauren Spencer on

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