ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel

Homing In on Your First Mortgage

Updated on May 31, 2010

Ruby slippers alone won't get you into the home of your dreams. It takes planning, research and calculation, calculation, calculation.

Buying your first home is an arduous task. When I first bought my first home, I struggled to understand interest rates, taxes and the mysteries of mortgages; more than once I thought, "Who do you have to be to understand this stuff, Keynes, Greenspan or Volcker?"

This is not to scare you into remaining a tenant for the rest of your life, but to give you faith: Shopping for a mortgage is something anyone can do — I am living proof that the inexperienced can succeed. A few months after I began the process, I closed on a three-bedroom ranch and wrote checks totaling more than the cost of my undergrad college education and my last two cars combined! But in the spirit of making home buying semi-painless (so you can move on to the really fun stuff, like collecting paint chips and buying furniture), here's the give-it-to-me-straight approach to mortgages, even after the subprime crash which has really shaken up the mortgage lending industry.

How Much House Can I Afford?

The short answer: Any house for which the total of your monthly mortgage payments, property tax, and insurance doesn't exceed 28 percent of your monthly gross income.

A slightly longer answer: Any house for which all of the above plus other debt payments such as credit cards and car loans total no more than 36 percent of your monthly income. Beyond these basic ratios, there are other variables that will affect how high or low your mortgage payments will be. One is interest rates: The higher the interest rate, the higher the mortgage payment. Another is down payment: How much can you pony up? The type of mortgage you get also comes into consideration.

How Big Should My Down Payment Be?

It doesn't have to be 20 percent. Although the no money down mortgages are thankfully lying on the scrap heap of financial history, you can find lenders who will consider down payments below 10 percent depending on your credit rating. There are, however, many circumstances that call for shelling out more — or less.

Put down more if:

  • Your lender recommends it because you have "dings" on your application, such as a spotty employment record or a history of late credit card payments.
    You want a relatively expensive house. If you qualify for a mortgage of only $150,000 and you desperately want that four-bedroom Georgian that costs $200,000, you'll have to come up with a $50,000 down payment.
  • You want, for whatever reason, to lower your monthly payments.

Put down less if:

  • You're eligible for one of several mortgage programs that help home buyers. Check online for the government incentives available in your area.
  • You don't have an emergency fund of at least two months' worth of mortgage payments. Most first-time home buyers don't have a lot of savings, so the lenders will check carefully to ensure that buyers don't wipe themselves out by the time they walk out of the closing.

Continued In Homing In on Your First Mortgage Part 2

Comments

    0 of 8192 characters used
    Post Comment

    No comments yet.

    working

    This website uses cookies

    As a user in the EEA, your approval is needed on a few things. To provide a better website experience, hubpages.com uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

    For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at: https://hubpages.com/privacy-policy#gdpr

    Show Details
    Necessary
    HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
    LoginThis is necessary to sign in to the HubPages Service.
    Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
    AkismetThis is used to detect comment spam. (Privacy Policy)
    HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
    HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
    Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
    CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
    Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the googleapis.com or gstatic.com domains, for performance and efficiency reasons. (Privacy Policy)
    Features
    Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
    Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
    Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
    Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
    Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
    VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
    PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
    Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
    MavenThis supports the Maven widget and search functionality. (Privacy Policy)
    Marketing
    Google AdSenseThis is an ad network. (Privacy Policy)
    Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
    Index ExchangeThis is an ad network. (Privacy Policy)
    SovrnThis is an ad network. (Privacy Policy)
    Facebook AdsThis is an ad network. (Privacy Policy)
    Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
    AppNexusThis is an ad network. (Privacy Policy)
    OpenxThis is an ad network. (Privacy Policy)
    Rubicon ProjectThis is an ad network. (Privacy Policy)
    TripleLiftThis is an ad network. (Privacy Policy)
    Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
    Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
    Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
    Statistics
    Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
    ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
    Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)