How Much of a Mortgage Can I Afford?

Homebuying advice from the credit counseling professionals.

Newton, MA (PRWEB) July 1, 2007 -- June is National Homebuyer Month in the U.S. Throughout the month, many individuals have taken advantage of educational programs such as American Consumer Credit Counseling's "Successful Homeownership." As a leading provider of consumer education, credit counseling and debt management services, ACCC has the following insight into the best way to stay on top of mortgage payments:

Before even beginning the home buying process, it is important to first examine a few economic factors. A consumer's total income and total debts serve as the most important factors for considering how much of a mortgage someone can afford. Most mortgage lenders base their decision making on two basic guidelines:

1. A homeowner's monthly housing costs should constitute no more than 28% of a household's total monthly pre-tax income. Monthly housing costs usually include a mortgage principal, interest and real estate taxes.

2. Monthly housing costs and other long-term debts combined should constitute no more than 36% of a household's total monthly pre-tax income. Long-term debts usually include car loans, homeowners insurance, car insurance, and credit card payments.

When preparing to buy a home, saving money for a down payment can be the most difficult step. A large down payment will ultimately decrease the size of a loan. By paying more money up front, monthly mortgage payments become smaller. The traditional 20% of the cost of the home can often add up to tens of thousands of dollars up front. When considering the amount of money to use as a down payment, take into account the following variables before making a final decision:

* What are the closing costs on the home?

* Is there any repair or construction work needed on the house?

* Are there any large-scale purchases required in the near future?

For more information about the homebuying process or the homebuyers' counseling that ACCC provides, call 1-800-769-3571.

ABOUT ACCC: American Consumer Credit Counseling (ACCC) is a non-profit 501 (c) (3) organization dedicated to empowering consumers to regain control of their lives through education, counseling and debt management. ACCC provides individuals with practical solutions for solving financial problems and recognizes that consumers' financial difficulties are often not the result of poor spending habits, but more frequently from extenuating circumstances beyond their control. As one of the nation's leading providers of financial education and credit counseling services, ACCC works with consumers to help them with the best plan of action to reduce their debt and regain financial stability. For more information or to access free financial education resources log on to www.consumercredit.com.

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