Mortgage – how much can I borrow
Are you considering about availing a mortgage loan or refinancing of your existing mortgage loan? “Mortgage how much can I borrow” – are you loosing sleep over this question? Do you want to get an answer to the query? There are some elements that come into play for calculating how much loan you would be able to borrow.
Important factors that determine how much mortgage you can borrow:
The first element is the value of your house. This would ascertain the amount of equity you possess and also help you get an idea about the highest amount of loan that you can borrow. For instance, if your house is valued at $300,000 and you owe $225,000 on the house, subsequently the highest amount that you are able to borrow in equity is $75,000.
The second element is your credit score. This would decide under which category you come. When you have a poor credit score, then you may not be eligible to borrow the amount to the extent that you could with a better credit score. This is figured out on the basis of a percentage system and the higher your credit score, the nearer you would be to 100% of the value of your home.
The final factor that the mortgage lenders take into account is your debt to income ratio. This is calculated by comparing your monthly payments for your automobile loan, mortgage loan, credit card debts and others mentioned in your credit report to your gross income amount. However, utility payments are not included. The highest debt to income ratio acceptable for the majority of lenders is 55%. The lesser your debt to income ratio, the higher you can borrow. The formula is quite easy which evaluates the risk of offering you a loan against the return. The poorer your credit score and the higher your debt to income ratio, the less is the possibility of getting the loan and the more is your rate of interest. This information should be sufficient to answer your question, “mortgage how much can I borrow?”
