When buying a house, the question that comes before “how much can I borrow” is “how much can I afford”. Your home affordability matters a lot in your home buying process. But how to know your home affordability? Well, a mortgage calculator – an online tool, can help you with this.
Besides, with a mortgage loan calculator Texas, you can compare several ‘what-if’ scenarios –
- How long will I live in the house?
It can greatly impact your decision on whether to choose a 30-year fixed-rate loan or opt for a shorter term. Generally, the longer term will provide a more affordable monthly payment; however, you will pay a lot more interest over the long term. A 15-year fixed-rate mortgage will cost you less interest rate over the life of the loan. However, your monthly payment will be considerably more.
- Is an adjustable-rate mortgage a better option for me?
In case you plan on being in this home for just a few years, a 5/1 ARM could be a good option. You will enjoy a lower initial interest rate that is fixed for five years. However, the rate will change annually after that.
- Am I trying to buy too much home?
A mortgage lender will always be more than happy to put your name on a big loan. However, how do you feel about it? Are you comfortable with how it may impact your monthly budget? Or are you a bit nervous about how to manage everything properly? Consider how your new home costs may impact your other spending goals, such as travel and savings, and then make a wise decision.
- How much of a down payment should I make?
It is always a big question. For traditional loans, the down payment requirement is 20% while for government-backed loans, like an FHA loan, the requirement is much lower – at least 3.5%. But you should keep this in mind that with lower down payments, you need to prepare yourself for a larger monthly payment. On the flip, with decent down payment, you may qualify for the best mortgage rate. So, save as much as possible for the down payment for a home loan program.
- How much of a credit score do I need to come with?
The credit requirement varies based on the type of home loan you want to choose and the requirement of the lender. Generally, traditional home loans ask for a higher credit score than government-backed home loans. Besides, different lenders ask for different credit scores to approve a home loan. As your credit score reflects your creditworthiness, you should try to improve your credit score as much as possible before applying for a home loan. With this, you can get easy approval and ensure the lowest mortgage rate.
So, go online, check your home affordability, and how it changes based on various scenarios. And finally, determine how to proceed with your buying procedure.
