As with anything Banks like to know that they will get their money back for the money they loan.  Debt to income is calculated based upon your total average gross income before taxes are taken out.  I have found that the best way to figure out if you can afford the payment is to take a look at your current housing expense and also see how much money you can put into savings at the same time.

If you have a debt to income ratio above 38% and cannot put any money into savings then you are probably not going to afford the payment on the house.  Some loans can be approved with a higher debt to income ratio but should you buy?

If you earn 2000.00 a month income and your debt to income ( DTI ) is 45% then you have 1100.00 left to pay your withholding taxes, car insurance, utilites, cell phone, and groceries.  If you have a household of 2 you can be assured your grocery budget and gas for your car will eat up most of that.

This is the reason I suggest you get with a CMPS Certified Mortgage Planner to build a plan around home ownership including credit, budgeting, and future financial goals.

Ron Yarbrough

Is it a Good Time to Buy

The answer is absolutely. Prices are very low. You may be asking yourself what if I loose money on my current home? Really if you look at Real Estate just like any other investment you have to pair your loss in order to maximize your gain.

You need to get the facts. If you lose 10% on a 175,000 investment and gain 8% on a 300,000 investment what is your cash gain?

Do the math.

175,000 x 10% = 17,500.00

300,000 x 8% = 30,000.00

Your actual cash gain is 12,500 in this scenario. If you divide that into the 125,000.00 cash invested total that is a 10% annual gain on the investment for 12 months. This doesn’t take into account the added tax efficiencies of a mortgage and the fact that you are most likely paying less interest on your new investment.

I have started converting this site over to a interactive blog site. My goals are to add more knowledge to consumers about mortgages and programs as well as spark interest in creating wealth through proper mortgage planning.

I look forward to comments and questions from everyone.

I primarily do business in Kansas but can lend money in many states. Our core business is in Texas, Oklahoma, Kansas, Missouri, Arkansas, New Mexico, Colorado, and Arizona.