Mortgage-Refinance Loan Measurment 101 — Evaluate Your Own Ability to Pay
monthly income and divide by 36 percent. Again, let’s assume you make $3,500 monthly. When divided by 36 percent, you get $1,225.00. Now, add up all your monthly minimum payments, plus your new house payment, and this new number needs to be less than $1,225.00. So, if you have very little debt, you can afford to go all the way to the $980.00 for a new mortgage. If you have a couple of cars, several credit cards and a cell phone, you’ll likely have to get much less house.
Now, these ratios are very conservative. In most cases, lenders will allow you to break one or both of these guidelines, based on other factors — things like A+ credit, good liquid assets or a large down payment.
Or, you may need a loan program that is non-conforming. This would involve a lender who increases these ratios as high as 50 percent, meaning
