Most of the new buyers of house face that problem how much to pay for mortgage payment in a month. They think about what is the criterion of the bank that provides mortgage to them. They also think that how much they should actually pay in monthly mortgage payment to keep their liquidity as well. How much they can afford for mortgage payment and still be able to save something for future as well? These all questions would be answered in this article so read along and found out the right amount of mortgage payment per month.
What amount should you consider?
You need to keep that in mind that you would not only pay the mortgage payment to your lender or banker but also pay the other expenses such as the interest on your principal amount, property taxes and home insurance as well or you might have to pay PMI (Private mortgage insurance) as well. You should have a rough idea about these expenses to access that whether you can afford that or not.
Classic School
Most of the banks provide a mortgage to those customers that can spend 35 to 45 percent of their gross income on mortgage monthly payments. After the lending crisis, most of the lenders, creditors and bakers prefer to use conservative school to access a person’s income for mortgage loans.
Conservative School
Conservative school lenders and creditors prefer 25 percent of your income to be spent on your mortgage monthly payments. Conservative people take into account the life emergencies and contingencies into account and claim that you housing mortgage payment with other house expenses should not exceed twenty five percent of your take home income.
Preferred rule
Some follow classic rule and some follow conservative school, so what is best? We suggest you to follow a mediocre ground. The middle way is that you should keep your mortgage monthly payments (including all other house expenses) to 28 percent of your gross income. You need to keep that in mind that the more you will pay in mortgage monthly payment, the less income would be available to you for other expenses in your life.
You might be able to afford the current mortgage payment but what about when you got married or when you have kids in future. The same monthly mortgage payment would become unaffordable to you. You need to keep such situations in mind before signing the mortgage with your lender.
Even if some banks are willing to provide people loan with monthly payments of almost 35 to 37 percent of your monthly payment but you must not be tempted to avail that. As such opportunity would consume most of your income and you would end up not meeting your other commitments in a month. Remember that bank willingness and your affordability is two different things and you must prefer your affordability of mortgage loans monthly payments to all other things.