When it comes to purchasing a home, you never want to put yourself in a tough financial situation. Figure out what you can afford before you go house hunting. This way, your dream home is never out of reach.
Ratios
There are a few ratios you can use to see just how much house you can afford:
• Housing-to-Expense: This ratio will tell you how much of your gross monthly income is available after expenses. A monthly mortgage payment will include your home loan’s principle, homeowners insurance, and taxes. To keep financial strain at a minimum, you don’t want your monthly mortgage payment to take up more than 39% of your monthly salary. Therefore, multiply your annual salary by .39 and divide the result by 12 (representing the 12 monthly payments you will make each year). The figure will show you the highest housing-to-expense ratio that you can afford.
• Debt-to-Income: This ratio tells you how much of your monthly salary goes toward expenses. This is any debit to your account, including a current rent or mortgage payment. To feel comfortable, we recommend your debts allocate for no more than 43% of your monthly income. Multiply your annual salary by .43 and divide the result by 12.
• Loan-to-Value: This ratio helps determine whether a mortgage banker will approve you for a loan. When purchasing a home, you will be asked to provide a down payment of at least 5% of the home’s value. Therefore, you are asking the banker to finance 95% of the home purchase. If you want to eliminate the insurance requirements that comes with mortgages, you’ll need to put down 20% which leaves you with a loan-to-value ratio of 80%.
Want to learn more?
Visit your local South Atlantic Bank or meet with our Mortgage Bankers to discuss the steps towards your dream home. We’re available to help you discover all of your financial potential.
Related Posts
What Does Financial Health Mean to You?
Is it paying bills on time, robust savings, retirement fund, affording a new car? Whatever financial health means to you, it starts with getting your finances in order. It’s easy to think that keeping track of your account balances is all you need to do to stay on top of your finances. But that is […]
Homeownership is the American Dream. It’s a significant step towards building wealth, but people across the country are struggling to purchase a home because of limited homes for sale, prices are high, and the Fed is raising interest rates. However, homeownership is not a lost dream – it’s a long-term investment. Here’s how you can […]
Do You Practice Safe Checks? It should come as easily as airline safety, so buckle up for this one. Despite the fact that check use has declined by 25%, reports of check fraud have soared. In fact, they’ve nearly doubled since 2021. Criminals are becoming more sophisticated and finding new ways to steal your financial […]
Protect Yourself from Scammers According to a recent alert to banks from the Financial Crimes Enforcement Network, part of the Treasury Department, criminals have been increasingly targeting the U.S. Mail and United States Postal Service mail carriers since the COVID-19 pandemic to commit check fraud. Criminals typically steal personal checks, business checks, tax refund checks, […]
Each year older Americans lose approximately $2.9 billion to fraud, but it is suspected that number is drastically underestimated because only one in 44 seniors report financial abuse. The following tips are helpful for seniors and their financial caregivers to proactively protect themselves and their loved ones from fraud. For more financial caregiver resources, visit […]
Watch Out for Election-Themed Scams In this week’s scam, cybercriminals are taking advantage of the upcoming United States elections to try and steal your personal information and money. The scams vary slightly and involve fake text messages, social media posts, phone calls, and more. Cybercriminals use AI to make these phishing attempts even more convincing. […]
The webpage you are about to visit is not part of the South Atlantic Bank web family or southatlantic.bank domain. The site is not under South Atlantic Bank control and South Atlantic Bank is not responsible for the information or links you may find there. South Atlantic Bank is providing the link only as a convenience.
The website you are about to visit, South Atlantic Financial Group, is not part of the South Atlantic Bank web family or southatlantic.xyz domain. The site is not under South Atlantic Bank control and South Atlantic Bank is not responsible for the information or links you may find there. South Atlantic Bank is providing the link only as a convenience.
Not a bank or credit union deposit obligation. Not FDIC or NCUA insured. Not insured by any federal government agency. Not guaranteed by any bank or credit union. May go down in value.
South Atlantic Bank receives compensation from MML Investors Services (MMLIS) and its affiliates for referring clients to MMLIS and its representatives. MMLIS’s affiliates include Massachusetts Mutual Life Insurance Company (MassMutual), MML Bay State Life Insurance Company (MML Bay State), C.M. Life Insurance Company (CM Life) and MML Insurance Agency, LLC (MMLIA). As a result, South Atlantic Bank has an incentive to refer clients to MMLIS and its representatives.
For the products and services offered through MMLIS, South Atlantic Bank with receive 12% of the dealer concessions, commissions and advisory fees received by MMLIS. For products offered through MMLIA, South Atlantic Bank will receive a percentage (which will be determined at the time of purchase) of the compensation paid to the MMLIS representative. For all products offered by MassMutual, MML Bay State and CM Life, South Atlantic Bank will receive a percentage (which will be determined at the time of purchase) of the compensation paid to the MMLIS representative.
Securities, investment advisory and financial planning services offered through qualified registered representatives of MML Investors Services, LLC., Member SIPC. Supervisory Office: 40 Calhoun Street, Suite 310, Charleston, SC 29401, Phone: 843-856-3411. South Atlantic Bank is not a subsidiary or affiliate of MML Investors Services and is not a current client. Local sales agencies are not subsidiaries of Massachusetts Mutual Life Insurance Company (MassMutual) or its affiliated companies.
